Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 05, 2019 | Jun. 30, 2018 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
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 Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 58,599,531 | ||
Entity Public Float | $ 4.9 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | ||
Current assets: | ||||
Cash and cash equivalents | $ 45,718 | $ 46,077 | [1] | |
Accounts receivable | 3,414 | 1,576 | [1] | |
Prepaid expenses | 7,658 | 4,982 | [1] | |
Inventory | 797 | 979 | [1] | |
Income tax receivable | 3,962 | 7,047 | [1] | |
Deferred contract costs | 35,286 | 26,403 | [1] | |
Current assets before funds held for clients | 96,835 | 87,064 | [1] | |
Funds held for clients | 967,787 | 1,089,201 | [1] | |
Total current assets | 1,064,622 | 1,176,265 | [1] | |
Property and equipment, net | 176,962 | 147,705 | [1] | |
Deposits and other assets | 2,249 | 1,456 | [1] | |
Goodwill | 51,889 | 51,889 | [1] | |
Intangible assets, net | 745 | 958 | [1] | |
Long-term deferred contract costs | 225,459 | 171,865 | [1] | |
Total assets | 1,521,926 | 1,550,138 | [1] | |
Current liabilities: | ||||
Accounts payable | 6,288 | 6,490 | [1] | |
Accrued commissions and bonuses | 10,671 | 9,585 | [1] | |
Accrued payroll and vacation | 10,741 | 7,015 | [1] | |
Deferred revenue | 8,980 | 6,982 | [1] | |
Current portion of long-term debt | 1,775 | 888 | [1] | |
Accrued expenses and other current liabilities | 22,440 | 19,991 | [1] | |
Current liabilities before client funds obligation | 60,895 | 50,951 | [1] | |
Client funds obligation | 967,787 | 1,089,201 | [1] | |
Total current liabilities | 1,028,682 | 1,140,152 | [1] | |
Deferred income tax liabilities, net | 70,206 | 49,129 | [1] | |
Long-term derivative liability | [1] | 554 | ||
Long-term deferred revenue | 55,671 | 44,642 | [1] | |
Net long-term debt, less current portion | 32,614 | 34,414 | [1] | |
Total long-term liabilities | 158,491 | 128,739 | [1] | |
Total liabilities | 1,187,173 | 1,268,891 | [1] | |
Commitments and contingencies (Note 12) | [1] | |||
Stockholders' equity: | ||||
Common stock, $0.01 par value (100,000,000 shares authorized, 60,746,715 and 60,149,411 shares issued at December 31, 2018 and 2017, respectively; 57,276,992 and 57,788,573 shares outstanding at December 31, 2018 and 2017, respectively) | 607 | 601 | [1] | |
Additional paid in capital | 203,680 | 161,809 | [1] | |
Retained earnings | 395,590 | 258,525 | [1] | |
Treasury stock, at cost (3,469,723 and 2,360,838 shares at December 31, 2018 and 2017, respectively) | (265,124) | (139,688) | [1] | |
Total stockholders' equity | [1] | 334,753 | 281,247 | |
Total liabilities and stockholders' equity | $ 1,521,926 | $ 1,550,138 | [1] | |
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
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 | 60,746,715 | 60,149,411 |
Common stock, shares outstanding | 57,276,992 | 57,788,573 |
Treasury stock, shares | 3,469,723 | 2,360,838 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||||
Revenues | ||||||
Total revenues | $ 566,336 | $ 433,047 | [1] | $ 329,141 | [1] | |
Cost of revenues | ||||||
Operating expenses | 76,231 | 62,438 | [1] | 48,268 | [1] | |
Depreciation and amortization | 14,532 | 9,590 | [1] | 5,798 | [1] | |
Total cost of revenues | 90,763 | 72,028 | [1] | 54,066 | [1] | |
Administrative expenses | ||||||
Sales and marketing | 143,881 | 110,846 | [1] | 85,361 | [1] | |
Research and development | 46,247 | 30,430 | [1] | 20,966 | [1] | |
General and administrative | 96,605 | 80,228 | [1] | 59,174 | [1] | |
Depreciation and amortization | 15,125 | 9,805 | [1] | 7,834 | [1] | |
Total administrative expenses | 301,858 | 231,309 | [1] | 173,335 | [1] | |
Total operating expenses | 392,621 | 303,337 | [1] | 227,401 | [1] | |
Operating income | 173,715 | 129,710 | [1] | 101,740 | [1] | |
Interest expense | (766) | (911) | [1] | (1,036) | [1] | |
Other income, net | 1,762 | (1,067) | [1] | 308 | [1] | |
Income before income taxes | 174,711 | 127,732 | [1] | 101,012 | [1] | |
Provision for income taxes | 37,646 | 4,246 | [1] | 30,591 | [1] | |
Net income | [1] | $ 137,065 | $ 123,486 | $ 70,421 | ||
Earnings per share, basic | $ 2.37 | $ 2.13 | [1] | $ 1.21 | [1] | |
Earnings per share, diluted | $ 2.34 | $ 2.10 | [1] | $ 1.19 | [1] | |
Weighted average shares outstanding: | ||||||
Basic | 57,711,315 | 57,839,155 | [1] | 57,550,204 | [1] | |
Diluted | 58,582,486 | 58,790,019 | [1] | 58,968,099 | [1] | |
Recurring [Member] | ||||||
Revenues | ||||||
Total revenues | $ 557,255 | $ 425,424 | [1] | $ 323,548 | [1] | |
Implementation and Other [Member] | ||||||
Revenues | ||||||
Total revenues | $ 9,081 | $ 7,623 | [1] | $ 5,593 | [1] | |
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | ||||
Cumulative-effect adjustment to Additional paid in capital and Retained earnings related to the adoption of ASU No. 2016-09 (see Note 2) | [1] | $ 62,585 | $ 24,575 | $ 38,010 | |||||
Beginning balance, value at Dec. 31, 2015 | 98,314 | [1] | $ 571 | 71,135 | [1] | 26,608 | [1] | ||
Beginning balance, shares at Dec. 31, 2015 | 57,119,873 | ||||||||
Vesting of restricted stock | $ 14 | (14) | [1] | ||||||
Vesting of restricted stock, shares | 1,333,410 | ||||||||
Stock-based compensation | [1] | 24,331 | 24,331 | ||||||
Repurchases of common stock | (49,958) | [1] | $ (49,958) | ||||||
Repurchases of common stock, shares | 1,122,261 | ||||||||
Net income | [1] | 70,421 | 70,421 | ||||||
Ending balance, value at Dec. 31, 2016 | 205,693 | [1] | $ 585 | 120,027 | [1] | 135,039 | [1] | $ (49,958) | |
Ending balance, shares at Dec. 31, 2016 | 58,453,283 | 1,122,261 | |||||||
Vesting of restricted stock | $ 16 | (16) | [1] | ||||||
Vesting of restricted stock, shares | 1,696,128 | ||||||||
Stock-based compensation | [1] | 41,798 | 41,798 | ||||||
Repurchases of common stock | (89,730) | [1] | $ (89,730) | ||||||
Repurchases of common stock, shares | 1,238,577 | ||||||||
Net income | [1] | 123,486 | 123,486 | ||||||
Ending balance, value at Dec. 31, 2017 | 281,247 | [1] | $ 601 | 161,809 | [1] | 258,525 | [1] | $ (139,688) | |
Ending balance, shares at Dec. 31, 2017 | 60,149,411 | 2,360,838 | |||||||
Vesting of restricted stock | $ 6 | (6) | [1] | ||||||
Vesting of restricted stock, shares | 597,304 | ||||||||
Stock-based compensation | [1] | 41,877 | 41,877 | ||||||
Repurchases of common stock | (125,436) | [1] | $ (125,436) | ||||||
Repurchases of common stock, shares | 1,108,885 | ||||||||
Net income | [1] | 137,065 | 137,065 | ||||||
Ending balance, value at Dec. 31, 2018 | $ 334,753 | [1] | $ 607 | $ 203,680 | [1] | $ 395,590 | [1] | $ (265,124) | |
Ending balance, shares at Dec. 31, 2018 | 60,746,715 | 3,469,723 | |||||||
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||||
Cash flows from operating activities: | ||||||
Net income | $ 137,065 | $ 123,486 | [1] | $ 70,421 | [1] | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 29,657 | 19,395 | [1] | 13,632 | [1] | |
Accretion of discount on available-for-sale securities | (1,112) | (451) | [1] | (135) | [1] | |
(Gain)/loss on disposition of property and equipment | [1] | 21 | (64) | |||
Amortization of debt discount and debt issuance costs | 32 | 117 | [1] | 124 | [1] | |
Stock-based compensation expense | 36,576 | 36,076 | [1] | 20,721 | [1] | |
Loss on early repayment of debt | [1] | 923 | ||||
Cash paid for derivative settlement | (188) | (24) | [1] | |||
(Gain)/loss on derivative | (479) | 673 | [1] | |||
Deferred income taxes, net | 21,077 | (7,681) | [1] | 15,340 | [1] | |
Changes in operating assets and liabilities: | ||||||
Accounts receivable | (1,838) | (237) | [1] | 1,015 | [1] | |
Prepaid expenses | (2,676) | (507) | [1] | (944) | [1] | |
Inventory | (306) | 462 | [1] | 418 | [1] | |
Deposits and other assets | (762) | (241) | [1] | 71 | [1] | |
Deferred contract costs | (60,730) | (48,619) | [1] | (42,019) | [1] | |
Accounts payable | 1,079 | 79 | [1] | (1,571) | [1] | |
Income taxes, net | 3,085 | (6,355) | [1] | 6,051 | [1] | |
Accrued commissions and bonuses | 1,086 | 1,582 | [1] | (684) | [1] | |
Accrued payroll and vacation | 3,726 | 2,246 | [1] | 1,871 | [1] | |
Deferred revenue | 13,027 | 11,913 | [1] | 10,675 | [1] | |
Accrued expenses and other current liabilities | 6,498 | (2,709) | [1] | 3,896 | [1] | |
Net cash provided by operating activities | 184,817 | 130,149 | [1] | 98,818 | [1] | |
Cash flows from investing activities: | ||||||
Purchase of short-term investments from funds held for clients | (145,011) | (66,235) | [1] | (113,792) | [1] | |
Proceeds from maturities of short-term investments from funds held for clients | 155,500 | 141,205 | [1] | 16,135 | [1] | |
Net change in funds held for clients | 112,037 | (305,476) | [1] | (63,749) | [1] | |
Purchases of property and equipment | (59,906) | (59,389) | [1] | (43,805) | [1] | |
Proceeds from sale of property and equipment | [1] | 295 | ||||
Net cash provided by (used in) investing activities | 62,620 | (289,895) | [1] | (204,916) | [1] | |
Cash flows from financing activities: | ||||||
Proceeds from issuance of long-term debt | [1] | 40,940 | 5,000 | |||
Repurchases of common stock | (105,188) | (56,880) | [1] | (35,561) | [1] | |
Withholding taxes paid related to net share settlements | (20,248) | (32,850) | [1] | (14,396) | [1] | |
Principal payments on long-term debt | (888) | (35,335) | [1] | (964) | [1] | |
Net change in client funds obligation | (121,414) | 230,957 | [1] | 161,541 | [1] | |
Debt extinguishment costs | [1] | (823) | ||||
Payment of debt issuance costs | (58) | (344) | [1] | (78) | [1] | |
Net cash provided by (used in) financing activities | (247,796) | 145,665 | [1] | 115,542 | [1] | |
Net change in cash and cash equivalents | (359) | (14,081) | [1] | 9,444 | [1] | |
Cash and cash equivalents | ||||||
Beginning of year | [1] | 46,077 | 60,158 | 50,714 | ||
End of year | 45,718 | 46,077 | [1] | 60,158 | [1] | |
Supplemental disclosures of cash flow information: | ||||||
Cash paid for interest, net of amounts capitalized | 708 | 791 | [1] | 938 | [1] | |
Cash paid for income taxes | 13,511 | 18,332 | [1] | 9,323 | [1] | |
Noncash investing and financing activities: | ||||||
Purchases of property and equipment, accrued but not paid | 1,759 | 6,686 | [1] | 4,651 | [1] | |
Stock-based compensation for capitalized software | $ 3,722 | $ 3,285 | [1] | $ 1,784 | [1] | |
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2018 | |
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 lifecycle 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Basis of Presentation 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 (“U.S. 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. Effective January 1, 2018, we adopted the requirements of Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” as discussed in Note 2. All amounts and disclosures set forth in this Form 10-K have been updated to comply with this new standard, as indicated by the “as adjusted” footnote in applicable tables within the notes to the consolidated financial statements. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on reported net income and did not result in any material change to operating cash flows. Adoption of New Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). 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. ASU 2014-09 also includes Accounting Standards Codification (“ASC”) 340-40, “Other Assets and Deferred Costs – Contracts with Customers” (“ASC 340-40”), which codifies the guidance on other assets and deferred costs relating to Impact on Previously Reported Results The provisions of ASU 2014-09 do not materially impact the timing or amount of revenue we recognize. The primary impact of adopting the new standard is the manner in which we account for certain costs to obtain new contracts (i.e., selling and commission costs) and costs to fulfill contracts (i.e., costs related to upfront implementation activities performed), which we had previously expensed as incurred. We also determined that the nonrefundable upfront fee charged to our clients, coupled with the option to renew, represents an implied performance obligation in the form of a material right. However, as these fees are deferred and recognized ratably over the ten-year estimated client life, consistent with our prior accounting policy, there is no change in revenue recognition. The following table presents a recast of selected consolidated statement of income line items after giving effect to the adoption of ASU 2014-09: Year Ended December 31, 2017 Year Ended December 31, 2016 As previously reported Adjustments As Adjusted As previously reported Adjustments As Adjusted (in thousands, except per share amounts) Administrative expenses Sales and marketing $ 150,512 $ (39,666 ) $ 110,846 $ 119,258 $ (33,897 ) $ 85,361 General and administrative $ 91,647 $ (11,419 ) $ 80,228 $ 69,046 $ (9,872 ) $ 59,174 Operating income $ 78,625 $ 51,085 $ 129,710 $ 57,971 $ 43,769 $ 101,740 Provision for income taxes $ 9,840 $ (5,594 ) $ 4,246 $ 13,403 $ 17,188 $ 30,591 Net income $ 66,807 $ 56,679 $ 123,486 $ 43,840 $ 26,581 $ 70,421 Earnings per share, basic $ 1.15 $ 0.98 $ 2.13 $ 0.76 $ 0.45 $ 1.21 Earnings per share, diluted $ 1.13 $ 0.97 $ 2.10 $ 0.74 $ 0.45 $ 1.19 The following table presents a recast of selected consolidated balance sheet line items after giving effect to the adoption of ASU 2014-09: December 31, 2017 As previously reported Adjustments As Adjusted (in thousands) Assets Deferred contract costs $ — $ 26,403 $ 26,403 Deferred income tax assets, net $ 3,294 $ (3,294 ) $ — Long-term deferred contract costs $ — $ 171,865 $ 171,865 Liabilities and Stockholders' Equity Deferred income tax liabilities, net $ — $ 49,129 $ 49,129 Additional paid in capital $ 137,234 $ 24,575 $ 161,809 Retained earnings $ 137,255 $ 121,270 $ 258,525 Total stockholders' equity $ 135,402 $ 145,845 $ 281,247 The following table presents a recast of selected consolidated statement of cash flows line items after giving effect to the adoption of ASU 2014-09: Year Ended December 31, 2017 Year Ended December 31, 2016 As previously reported Adjustments As Adjusted As previously reported Adjustments As Adjusted (in thousands) Cash flows from operating activities Net income $ 66,807 $ 56,679 $ 123,486 $ 43,840 $ 26,581 $ 70,421 Stock-based compensation expense 38,542 (2,466 ) 36,076 22,471 (1,750 ) 20,721 Deferred income taxes, net (2,087 ) (5,594 ) (7,681 ) (1,848 ) 17,188 15,340 Deferred contract costs — (48,619 ) (48,619 ) — (42,019 ) (42,019 ) Net cash provided by operating activities $ 130,149 $ — $ 130,149 $ 98,818 $ — $ 98,818 Use of Estimates The preparation of consolidated financial statements in conformity with U.S. 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 of property and equipment and intangible assets, the life of our client relationships, the fair value of our stock-based awards and the fair value of our financial instruments, intangible assets and goodwill. These estimates are based on historical experience, where applicable, and other assumptions that management believes are reasonable under the circumstances. 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 business 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 recognized 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. Inventory is stated at the lower of cost or market with cost 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. The Company’s inventory obsolescence reserve was $0 as of December 31, 2018, 2017 and 2016, respectively. 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, 2018, 2017 and 2016, we incurred interest costs of $1.6 million, $1.7 million and $1.3 million, respectively. For the years ended December 31, 2018, 2017 and 2016, interest costs of $0.8 million, $0.8 million and $0.4 million, respectively, were capitalized. Internal Use Software 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 $22.0 million and $15.8 million during the years ended December 31, 2018 and 2017, respectively, are included in property and equipment. Amortization expense of capitalized software costs were $12.5 million, $7.0 million and $3.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. Derivatives In December 2017, we entered into a floating-to-fixed rate swap agreement to limit the exposure to interest rate risk related to our debt. Our interest rate swap effectively converts a portion of the variable interest rate payments to fixed interest rate payments. We do not hold derivative instruments for trading or speculative purposes. The Company has not elected to designate the interest rate swap as a hedge. Changes in the fair value of the derivative are recognized in our consolidated statements of income. 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 recognized. 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, 2018. For the years ended December 31, 2018, 2017 and 2016, there were no indicators of impairment. Intangible assets with definite 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 definite 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 definite lives, for the years ended December 31, 2018, 2017 and 2016. 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 by us, and we earn interest on these funds during the interval between receipt and disbursement. These investments are shown in our 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 December 31, 2018 and 2017, the funds held for clients were invested in money market funds, demand deposit accounts, commercial paper and certificates of deposit. Short-term investments in commercial paper and certificates of deposit with an original maturity duration greater than three months are classified as available-for-sale securities, and are also included within the funds held for clients line item on the balance sheet. These available-for-sale securities are recorded on the balance sheet at fair value, which approximates the amortized cost of the securities. Funds held for clients are classified as a current asset in the consolidated balance sheets because the funds are held solely to satisfy the client funds obligation. Stock Repurchase Plan In May 2016, our Board of Directors authorized a stock repurchase plan allowing for the repurchase of shares of our common stock 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. Since the initial authorization of the stock repurchase plan, our Board of Directors has amended and extended and authorized new stock repurchase plans from time to time. On February 13, 2018, we announced that our Board of Directors authorized the repurchase of up to an additional $100.0 million of common stock. Most recently, on November 20, 2018, we announced that our Board of Directors authorized the repurchase of up to an additional $150.0 million of our common stock. As of December 31, 2018, there was $162.0 million available for repurchases. Our stock 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, shares withheld for taxes associated with the vesting of restricted stock and other corporate considerations. During the year ended December 31, 2018, we repurchased an aggregate of 1,108,885 shares of our common stock at an average cost of $113.12 per share, including 186,165 shares withheld to satisfy tax withholding obligations for certain employees upon the vesting of restricted common stock. During the year ended December 31, 2017, we repurchased an aggregate of 1,238,577 shares of our common stock at an average cost of $72.45 per share, including 464,302 shares withheld to satisfy tax withholding obligations for certain employees upon the vesting of restricted common stock. Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to our clients in an amount that reflects the consideration we expect to be entitled to for those goods or services. Substantially all of our revenues are comprised of revenue from contracts with clients. Sales tax and other applicable taxes are excluded from revenues. The following table disaggregates revenue by recurring and implementation and other revenues, which represent the major categories of revenues: Year Ended December 31, 2018 2017 2016 (in thousands) Revenues Recurring $ 557,255 $ 425,424 $ 323,548 Implementation and other 9,081 7,623 5,593 Total revenues $ 566,336 $ 433,047 $ 329,141 Recurring Revenues 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 form filings and delivery of client payroll checks and reports. Talent acquisition includes our applicant tracking, candidate tracker, background check, on-boarding, e-verify and tax credit services applications. 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 our payroll and tax management, Paycom Pay, expense management, garnishment management and GL Concierge applications. Talent management includes our employee self-service, compensation budgeting, performance management, executive dashboard and Paycom learning and course content applications. HR management includes our document and task management, government and compliance, benefits administration, COBRA administration, personnel action forms, surveys and enhanced Affordable Care Act applications. The performance obligations related to recurring revenues are satisfied 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 as part of the client’s payroll cycle or through direct wire transfer, which minimizes the default risk. The contract period for substantially all contracts associated with these revenues is one month due to the fact that both we and the client have the unilateral right to terminate a wholly unperformed contract without compensating the other party by providing 30 days’ notice of termination. Our payroll application is the foundation of our solution, and all of our clients are required to utilize this application in order to access our other applications. For clients who purchase multiple applications, due to the short-term nature of our contracts, we do not believe it is meaningful to separately assess and identify whether or not each application potentially represents its own, individual, performance obligation as the revenue generated from each application is recognized within the same month as the revenue from the core payroll application. Similarly, we do not believe it is meaningful to individually determine the standalone selling price for each application. We consider the total price charged to a client in a given period to be indicative of the standalone selling price, as the total amount charged is within a reasonable range of prices typically charged for our goods and services for comparable classes of client groups. Implementation and Other Revenues Implementation and other revenues consist of nonrefundable upfront conversion fees which are charged to new clients to offset the expense of new client set-up as well as revenues from the sale of time clocks as part of our employee time and attendance services. Although these revenues are related to our recurring revenues, they represent distinct performance obligations. Implementation activities primarily represent administrative activities that allow us to fulfill future performance obligations for our clients and do not represent services transferred to the client. However, the nonrefundable upfront fee charged to our clients results in an implied performance obligation in the form of a material right to the client related to the client’s option to renew at the end of each 30-day contract period. Further, given that all other services within the contract are sold at a total price indicative of the standalone selling price, coupled with the fact that the upfront fees are consistent with upfront fees charged in similar contracts that we have with clients, the standalone selling price of the client’s option to renew the contract approximates the dollar amount of the nonrefundable upfront fee. The nonrefundable upfront fee is typically included on the client’s first invoice, and is deferred and recognized ratably over the estimated renewal period (i.e. the ten-year estimated client life). Revenues from the sale of time clocks are recognized when control is transferred to the client upon delivery of the product. We estimate the standalone selling price for the time clocks by maximizing the use of observable inputs such as our specific pricing practices for time clocks. Contract Balances The timing of revenue recognition for recurring services is consistent with the invoicing of clients as they both occur during the respective client payroll period for which the services are provided. Therefore, we do not recognize a contract asset or liability resulting from the timing of revenue recognition and invoicing. We have elected to apply the practical expedient not to disclose the value of unsatisfied performance obligations for contracts that are less than one year in length. For these contracts, we determined that the core, non-material right, performance obligations are generally satisfied in full by the end of each reporting period as most of our contracts with clients start at the beginning of a calendar month. However, this expedient cannot be applied to initial 30-day contracts with a client that also contain an implied performance obligation in the form of a material right as the material right performance obligation is being recognized over the expected client life which exceeds one year. For the material right performance obligation, as discussed above, we defer the amounts allocated and recognize them ratably over the estimated client life of ten years. Finally, we have also elected to apply the transition expedient that allows for all reporting periods presented before the date of initial application to exclude disclosure of the amounts of transaction price allocated to the remaining unsatisfied performance obligations. Accordingly, the table below is only for the year ended December 31, 2018. Changes in deferred revenue related to material right performance obligations were as follows: Year Ended December 31, 2018 (in thousands) Balance, beginning of period $ 51,624 Deferral of revenue 20,925 Recognition of unearned revenue (7,898 ) Balance, end of period $ 64,651 We expect to recognize $9.0 million of deferred revenue related to material right performance obligations in 2019 and 2020, and $46.7 million of such deferred revenue thereafter. Assets Recognized from the Costs to Obtain and Costs to Fulfill Revenue Contracts We recognize an asset for the incremental costs of obtaining a contract with a client if we expect the amortization period to be longer than one year. We have determined that certain selling and commission costs meet the capitalization criteria under ASC 340-40, which prior to the adoption of ASU 2014-09 were expensed as incurred. We also recognize an asset for the costs to fulfill a contract with a client if such costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered. We have determined that substantially all costs related to implementation activities are administrative in nature and also meet the capitalization criteria under ASC 340-40. These capitalized costs to fulfill principally relate to upfront direct costs that are expected to be recovered through margin and that enhance our ability to satisfy future performance obligations. The assets related to both costs to obtain, and costs to fulfill, contracts with clients are accounted for utilizing a portfolio approach, and are capitalized and amortized over the expected period of benefit, which we have determined to be the estimated client relationship of ten years. The expected period of benefit has been determined to be the estimated life of the client relationship primarily because we incur no new costs to obtain, or costs to fulfill, a contract upon renewal of such contract. Additional commission costs may be incurred when an existing client purchases additional applications; however, these commission costs relate solely to the additional applications purchased and are not related to contract renewal. Furthermore, additional fulfillment costs associated with existing clients purchasing additional applications are minimized by our seamless single-database platform. These assets are presented as deferred contract costs in the accompanying consolidated balance sheets. Amortization expense related to costs to obtain and costs to fulfill a contract are included in the “sales and marketing” and “general and administrative” line items in the accompanying consolidated statements of income. The following table presents the asset balance and related amortization expense for these contract costs: As of and for the Year Ended December 31, 2018 Beginning Capitalization Amortization Ending Balance of Costs Balance (in thousands) Costs to obtain a contract $ 126,207 $ 51,858 $ (19,076 ) $ 158,989 Costs to fulfill a contract $ 72,061 $ 41,224 $ (11,529 ) $ 101,756 Cost of Revenues Our costs and expenses applicable to total revenues represent 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, 2018, 2017 and 2016 were $16.8 million, $7.9 million and $4.9 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 recognized on a net basis, and therefore, excluded from revenues. For the years ended December 31, 2018, 2017 and 2016, sales taxes collected and remitted were $6.5 million, $5.0 million and $4.3 million, respectively. Employee Stock-Based Compensation Time-based stock compensation awards to employees are recognized on a pro-rata basis 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 on a pro-rata basis 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 is 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 recognized 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 recognize 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 do not meet this threshold. Our policy is to recognize interest and penalties, if any, related to uncertain tax positions as a component of general and administrative expenses. We have one open income tax examination as of December 31, 2018 with the state of Virginia. However, we do not expect the result of the examination to impact income tax expense. We file income tax returns with the United States federal government and various state jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2015. Seasonality Our revenues are seasonal in nature. Recurring revenues include revenues relating to the annual processing of payroll forms, such as Form W-2, Form 1099, and Form 1095 and revenues from processing unscheduled payroll runs (such as bonuses) for our clients. Because payroll forms are typically processed in the first quarter of the year, first quarter revenues and margins are generally higher than in subsequent quarters. These seasonal fluctuations in revenues can also have an impact on gross profits. Historical results impacted by these seasonal trends should not be considered a reliable indicator of our future results of operations. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The purpose of this new 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 us beginning January 1, 2019, which we plan to adopt using the modified retrospective method and the transition relief guidance provided by the FASB in ASU 2018-11. Under this adoption method, we will not restate comparative prior periods and we will carry forward the assessment of whether our contracts are or contain leases, the classification of our leases and the remaining lease terms. Based on our current portfolio of leases, approximately $21.6 million of lease assets and liabilities will be recognized on our balance sheet upon adoption, primarily relating to operating leases for real estate. Under the transition relief guidance, we have elected the lease vs. non-lease components practical expedient relating to the asset class of real estate, the short-term lease exemption practical expedient and the package of practical expedients. The Company has determined that it will not elect the practical expedient related to hindsight. In connection with the adoption of this standard, the Company is updating its control framework for any new internal controls related to leases that will be required, as well as any changes to existing controls, effective with the January 1, 2019 adoption. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | 3. Property and equipment and accumulated depreciation and amortization were as follows: December 31, 2018 2017 (in thousands) Property and equipment Buildings $ 101,421 $ 60,441 Software and capitalized software costs 66,634 41,996 Computer equipment 39,492 27,928 Rental clocks 16,950 13,131 Furniture, fixtures and equipment 16,474 7,528 Leasehold improvements 1,274 767 Vehicles 74 — 242,319 151,791 Less: accumulated depreciation and amortization (82,969 ) (53,525 ) 159,350 98,266 Construction in progress 8,589 40,446 Land 9,023 8,993 Property and equipment, net $ 176,962 $ 147,705 We capitalize computer software development costs related to software developed for internal use in accordance with ASC 350-40. For the years ended December 31, 2018 and 2017, we capitalized $22.0 million and $15.8 million, respectively, of computer software development costs related to software developed for internal use. Included in the construction in progress balance at December 31, 2018 and 2017 is $0.1 and $2.0 million in retainage, respectively. Rental clocks included in property and equipment, net represent time clocks issued to clients under month-to-month operating leases. We capitalize interest incurred for indebtedness related to construction in progress. For the years ended December 31, 2018, 2017 and 2016, we incurred costs of $1.6 million, $1.7 million and $1.3 million, respectively. For the years ended December 31, 2018, 2017 and 2016, interest cost of $0.8 million, $0.8 million and $0.4 million, respectively, was capitalized. Depreciation and amortization expense for property and equipment, net was $29.4 million, $18.5 million and $12.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, Net | 4. Goodwill represents the excess of acquired cost over our net tangible and identified intangible assets. As of both December 31, 2018 and 2017, goodwill totaled $51.9 million. We have selected June 30 as our annual goodwill impairment testing date. We have elected to perform a qualitative analysis of the fair value of our goodwill and determined there was no impairment as of either June 30, 2018 or 2017. As of December 31, 2018 and 2017, there were no indicators of impairment. All of our intangible assets other than goodwill are considered to have definite lives and, as such, are subject to amortization. The components of intangible assets are as follows: December 31, 2018 Weighted Average Remaining Accumulated Useful Life Gross Amortization Net (Years) (dollars in thousands) Intangibles: Trade name 3.5 $ 3,194 $ (2,449 ) $ 745 Total $ 3,194 $ (2,449 ) $ 745 December 31, 2017 Weighted Average Remaining Accumulated Useful Life Gross Amortization Net (Years) (dollars in thousands) Intangibles: Trade name 4.5 $ 3,194 $ (2,236 ) $ 958 Total $ 3,194 $ (2,236 ) $ 958 Amortization of intangible assets the years ended December 31, 2018, 2017 and 2016 was $0.2 million, $0.9 million and $1.6 million, respectively. Estimated amortization expense for our existing intangible assets for the next five years and thereafter is as follows (in thousands): Year Ending December 31, Amortization 2019 $ 213 2020 213 2021 213 2022 106 Total $ 745 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 5. Our long-term debt consisted of the following: December 31, 2018 2017 (in thousands) Net term note to bank due September 7, 2025 $ 34,389 $ 35,302 Total long-term debt (including current portion) 34,389 35,302 Less: Current portion (1,775 ) (888 ) Total long-term debt, net $ 32,614 $ 34,414 On December 7, 2017, we entered into a senior secured term credit agreement (the “Term Credit Agreement”), pursuant to which JPMorgan Chase Bank N.A., Bank of America, N.A. and Kirkpatrick Bank have agreed to make certain term loans to us (the “Term Loans”) in an aggregate principal amount of $60.0 million on or prior to September 7, 2018 (the “Term Loan Draw Expiration Date”). On September 12, 2018, we entered into the First Amendment to the Term Credit Agreement dated effective as of September 7, 2018, which extended the Term Loan Draw Expiration Date to March 7, 2019. As of December 31, 2018, our indebtedness of $34.6 million consisted solely of Term Loans made under the Term Credit Agreement. Unamortized debt issuance costs of $0.2 million and $0.2 million as of December 31, 2018 and 2017, respectively, are presented as a direct deduction from the carrying amount of the debt liability. After giving effect to the Term Loans made on December 7, 2017, there was $24.5 million of borrowing capacity remaining under the Term Credit Agreement as of December 31, 2018. Our obligations under the Term Loans are secured by a mortgage and first priority security interest in our headquarters property. Term Loans made after December 7, 2017 may be used to finance hard and soft costs related to the completion of construction of our fourth headquarters building and any landscaping, groundwork, parking lots and roads reasonably incidental thereto. The Term Loans mature on September 7, 2025 and bear interest, at our option, at either (a) a prime rate plus 1.0% or (b) an adjusted LIBOR rate for the interest period in effect for such Term Loan plus 1.5%. Under the Term Credit Agreement, we are subject to two material financial covenants, which require us to maintain a fixed charge coverage ratio of not less than 1.25 to 1.0 and a funded indebtedness to EBITDA ratio of not greater than 2.0 to 1.0. As of December 31, 2018, we were in compliance with these covenants. On February 12, 2018, we entered into a senior secured revolving credit agreement (the “Revolving Credit Agreement”) with JPMorgan Chase Bank, N.A. and Bank of America, N.A. that provides for a senior secured revolving credit facility (the “Facility”) in the aggregate principal amount of $50.0 million, which may be increased to up to $100.0 million, subject to obtaining additional lender commitments and certain approvals and satisfying certain other conditions. The Facility includes a $5.0 million sublimit for swingline loans and a $2.5 million sublimit for letters of credit. The Facility is scheduled to mature on February 12, 2020. Borrowings under the Facility will generally bear interest at a prime rate plus 1.0% or, at our option, an adjusted LIBOR rate for the interest period in effect for such borrowing plus 1.5%. The proceeds of the loans and letters of credit under the Facility are to be used only for our general business purposes and working capital. Letters of credit are to be issued only to support our business operations. As of December 31, 2018, we did not have any borrowings outstanding under the Facility. Under the Revolving Credit Agreement, we are required to maintain a fixed charge coverage ratio of not less than 1.25 to 1.0 and a funded indebtedness to EBITDA ratio of not greater than 2.0 to 1.0. Additionally, the Revolving Credit Agreement contains customary affirmative and negative covenants, including covenants limiting our ability to, among other things, grant liens, incur debt, effect certain mergers, make certain investments, dispose of assets, enter into certain transactions, including swap agreements and sale and leaseback transactions, pay dividends or distributions on our capital stock, and enter into transactions with affiliates, in each case subject to customary exceptions for a facility of the size and type of the Facility. As of December 31, 2018, we were in compliance with all covenants related to the Revolving Credit Agreement. As of December 31, 2018 and 2017, the carrying value of our total long-term debt approximated its fair value as of such date. 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, 2018 are as follows (in thousands): Year Ending December 31, 2019 $ 1,775 2020 1,775 2021 1,775 2022 1,775 2023 1,775 Thereafter 25,738 Total $ 34,613 |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | 6. In December 2017, we entered into a floating-to-fixed interest rate swap agreement to limit the exposure to floating interest rate risk related to the Term Loans. We do not hold derivative instruments for trading or speculative purposes. The interest rate swap agreement effectively converts a portion of the variable interest rate payments to fixed interest rate payments. We account for our derivatives under ASC Topic 815, “Derivatives and Hedging,” and recognize all derivative instruments on the consolidated balance sheets at fair value as either short-term or long-term assets or liabilities based on their anticipated settlement date. See Note 7, “Fair Value of Financial Instruments”. We have elected not to designate our interest rate swap as a hedge; therefore, changes in the fair value of the derivative instrument are being recognized in our consolidated statements of income within Other income, net. The objective of the interest rate swap is to reduce the variability in the forecasted interest payments of the Term Loans, which is based on a one-month LIBOR rate versus a fixed interest rate of 2.54% on a notional value of $35.5 million. Under the terms of the interest rate swap agreement, we will receive quarterly variable interest payments based on the LIBOR rate and will pay interest at a fixed rate. The interest rate swap agreement has a maturity date of September 7, 2025. For the years ended December 31, 2018 and 2017, we recognized a gain of $0.7 million and loss of $0.6 million, respectively, for the change in fair value of the interest rate swap, which is included in Other income, net in the consolidated statements of income. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2018 | |
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. See Note 5 for discussion of the fair value of our debt. As discussed in Note 2, we invest the funds held for clients in money market funds, demand deposit accounts, commercial paper with a maturity duration less than three months and certificates of deposit, and classify as cash and cash equivalents within the funds held for clients line item in the consolidated balance sheets. Short-term investments in commercial paper and certificates of deposit with a maturity duration greater than three months are classified as available-for-sale securities, and are also included within the funds held for clients line item. These available-for-sale securities are recorded on the balance sheet at fair value, which approximates the amortized cost of the securities. As of December 31, 2018 and 2017, all available-for-sale securities and certificates of deposit were due in one year or less. As discussed in Note 6, during the year ended December 31, 2017, we entered into an interest rate swap. The interest rate swap is measured on a recurring basis based on quoted prices for similar financial instruments and other observable inputs recognized at fair value. The accounting standard for fair value measurements establishes a three-level fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: • Level 1 – Observable inputs such as quoted prices in active markets • Level 2 – Inputs other than quoted prices in active markets for identical assets or liabilities that are observable either directly or indirectly or quoted prices that are not active • Level 3 – Unobservable inputs in which there is little or no market data Included in the following table are the Company’s major categories of assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 and 2017: December 31, 2018 Level 1 Level 2 Level 3 Total Assets: (in thousands) Commercial paper $ — $ 21,041 $ — $ 21,041 Certificates of deposit $ — $ 6,000 $ — $ 6,000 Interest rate swap $ — $ 17 $ — $ 17 December 31, 2017 Level 1 Level 2 Level 3 Total Assets: (in thousands) Commercial paper $ — $ 14,918 $ — $ 14,918 Certificates of deposit $ — $ 21,500 $ — $ 21,500 Liabilities: Interest rate swap $ — $ 649 $ — $ 649 |
Employee Savings Plan and Emplo
Employee Savings Plan and Employee Stock Purchase Plan | 12 Months Ended |
Dec. 31, 2018 | |
Compensation Related Costs [Abstract] | |
Employee Savings Plan and Employee Stock Purchase Plan | 8. Employees over the age of 18 and have completed ninety days of service are eligible to participate in our 401(k) plan. We have made a Qualified Automatic Contribution Arrangement (“QACA”) election, whereby the Company matches the contribution of 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 $5.3 million, $4.1 and $3.5 million for the years ended December 31, 2018, 2017 and 2016, 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 limits specified by the Internal Revenue Service. The shares reserved for purposes of the ESPP are shares the Company purchases 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 years ended December 31, 2018, 2017 and 2016, eligible employees purchased 59,041, 76,728 and 110,658 shares, respectively, 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 $1.3 million, $0.8 million and $0.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 9. Basic earnings per share is based on the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share is computed in a similar manner to basic earnings per share 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. Certain 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 unvested shares of restricted stock granted in 2015 are considered participating securities, while all other unvested shares of restricted stock are not considered participating securities. The following is a reconciliation of net income and the shares of common stock used in the computation of basic and diluted earnings per share (in thousands, except share and per share amounts): Year Ended December 31, 2018 2017 *As Adjusted 2016 *As Adjusted Numerator: Net income $ 137,065 $ 123,486 $ 70,421 Less: income allocable to participating securities (159 ) (315 ) (535 ) Income allocable to common shares $ 136,906 $ 123,171 $ 69,886 Add back: undistributed earnings allocable to participating securities 159 315 535 Less: undistributed earnings reallocated to participating securities (156 ) (310 ) (535 ) Numerator for diluted earnings per share $ 136,909 $ 123,176 $ 69,886 Denominator: Basic weighted average shares outstanding 57,711,315 57,839,155 57,550,204 Dilutive effect of unvested restricted stock 871,171 950,864 1,417,895 Diluted weighted average shares outstanding 58,582,486 58,790,019 58,968,099 Earnings per share: Basic $ 2.37 $ 2.13 $ 1.21 Diluted $ 2.34 $ 2.10 $ 1.19 * Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Stockholders' Equity and Stock-
Stockholders' Equity and Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stockholders' Equity and Stock-Based Compensation | 10. We have historically issued shares of restricted stock under the Paycom Software, Inc. 2014 Long-Term Incentive Plan (the “LTIP”) that are subject to either time-based vesting conditions or market-based vesting conditions. The market-based vesting conditions are based on the Company’s total enterprise value (“TEV”) exceeding certain specified thresholds. Compensation expense related to the issuance of shares with time-based vesting conditions (“Time-Based Shares”) is measured based on the fair value of the award on the grant date and recognized over the requisite service period on a straight-line basis. Compensation expense related to the issuance of shares with market-based vesting conditions (“Market-Based Shares”) is measured based upon the fair value of the award on the grant date and recognized on a straight-line basis over the vesting period based upon the probability that the vesting condition will be met. The following table presents a summary of the grant-date fair values of restricted stock granted during the years ended December 31, 2018, 2017 and 2016 and the related assumptions: Year Ended December 31, 2018 2017 2016 Grant-date fair value of restricted stock $81.14 - $122.83 $46.78 - $60.67 $23.15 - $49.34 Risk-free interest rate 2.54% 1.85% 1.28% - 1.36% Estimated volatility 25.0% 23.0% 21.0% - 23.0% Expected life (in years) 2.0 2.3 2.7 The following table summarizes restricted stock awards activity for the year ended December 31, 2018: Time-Based Shares Market-Based Shares Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Unvested shares of restricted stock outstanding at December 31, 2017 888,680 $ 42.17 — $ — Granted 337,050 99.76 284,118 82.84 Vested (314,224 ) 34.14 (283,080 ) 82.84 Forfeited (105,037 ) 56.26 (1,038 ) 82.64 Unvested shares of restricted stock outstanding at December 31, 2018 806,469 $ 67.54 — $ — During the year ended December 31, 2018, we issued an aggregate of 621,168 shares of restricted stock to our executive officers, certain non-executive employees and non-employee directors under the LTIP, consisting of 284,118 Market-Based Shares and 337,050 Time-Based Shares. The Market-Based Shares were scheduled to vest 50% on the first date that the Company’s TEV (calculated as defined in the applicable restricted stock award agreement) equaled or exceeded $5.9 billion and 50% on the first date that the Company’s TEV equaled or exceeded $6.2 billion, in each case provided that (i) such date occurred on or before the sixth anniversary of the grant date and (ii) the recipient was employed by, or providing services to, the Company or a subsidiary on the applicable vesting date. As shown in the table below, all Market-Based Shares issued on January 26, 2018 vested during the year ended December 31, 2018. The following table summarizes vesting activity for Market-Based Shares during the year ended December 31, 2018, the associated compensation cost recognized in connection with the vesting event and the number of shares withheld to satisfy tax withholding obligations: Vesting Condition Date Vested Number of Shares Vested Compensation Cost Recognized Upon Vesting Shares Withheld for Taxes 1 Market-based (TEV = $5.9 billion) March 14, 2018 141,599 $9.7 million 54,000 Market-based (TEV = $6.2 billion) March 23, 2018 141,481 $10.1 million 54,909 1 The vesting conditions for Time-Based Shares issued in 2018 vary based on the category of the recipient. The Time-Based Shares issued to executive officers and non-executive sales employees in 2018 will vest in three equal annual tranches beginning on a specified initial vesting date and thereafter on the first and second anniversaries of such date, provided that the executive officer or non-executive sales employee is employed by, or providing services to, the Company on the applicable vesting date. Time-Based Shares issued to certain non-executive, non-sales employees during 2018 will vest 25% on a specified initial vesting date and 25% on each of the first three anniversaries of such initial vesting date, provided that the recipient is employed by, or providing services to, the Company on the applicable vesting date. Time-based shares issued to non-employee members of our Board of Directors will cliff-vest on the seventh day following the first anniversary of the date of grant, provided that such director is providing services to the Company through the applicable vesting date. Our total compensation expense related to restricted stock was $36.4 million, $36.0 million and $20.8 million for the years ended December 31, 2018, 2017 and 2016, respectively. There was $41.4 million of unrecognized compensation cost, net of estimated forfeitures, related to unvested shares of restricted stock outstanding as of December 31, 2018. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.8 years as of December 31, 2018. We capitalized stock-based compensation costs related to software developed for internal use of $3.7 million, $3.3 million and $1.8 million for the years ended December 31, 2018, 2017 and 2016, respectively. The following table presents non-cash stock-based compensation expense resulting from restricted stock awards, which is included in the following line items in the accompanying consolidated statements of income for the years ended December 31, 2018, 2017 and 2016: Year Ended December 31, 2018 2017 *As Adjusted 2016 *As Adjusted (in thousands) Operating expense $ 4,041 $ 3,950 $ 2,217 Sales and marketing 7,510 5,023 3,028 Research and development 3,013 1,912 836 General and administrative 21,847 25,162 14,715 Total non-cash stock-based compensation expense $ 36,411 $ 36,047 $ 20,796 |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | 11. Our Chief Sales Officer owned a .01% general partnership interest and a 10.49% limited partnership interest in 417 Oakbend, LP, a Texas limited partnership, until April 2016. For the period under his ownership during 2016, we paid rent on our Dallas office space to 417 Oakbend, LP in the amount of $0.1 million. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. 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 Our leases primarily consist of several noncancellable operating leases for office space with contractual terms expiring from 2019 to 2024. 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 the Company 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. We had $1.4 million and $1.3 million as of December 31, 2018 and 2017, respectively, recognized 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, 2018 were as follows (in thousands): Year Ending December 31, 2019 $ 8,315 2020 6,900 2021 5,224 2022 4,478 2023 2,839 Thereafter 502 Total minimum lease payments $ 28,258 Rent expense under operating leases for the years ended December 31, 2018, 2017 and 2016 was $7.6 million, $6.1 million and $5.6 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, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 13. The items comprising income tax expense are as follows: Year Ended December 31, 2018 2017 *As Adjusted 2016 *As Adjusted (in thousands) Provision for current income taxes Federal $ 12,414 $ 10,136 $ 12,207 State 4,155 1,791 3,044 Total provision for current income taxes 16,569 11,927 15,251 Provision (benefit) for deferred income taxes, net Federal 14,365 (3,865 ) 12,708 State 6,712 (3,816 ) 2,632 Total benefit for deferred income taxes, net 21,077 (7,681 ) 15,340 Total provision for income taxes $ 37,646 $ 4,246 $ 30,591 * Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. The following schedule reconciles the statutory Federal tax rate to the effective income tax rate: Year Ended December 31, 2018 2017 *As Adjusted 2016 *As Adjusted Federal statutory tax rate 21 % 35 % 35 % Increase (decrease) resulting from: State income taxes, net of Federal income tax benefit 6 % 4 % 4 % Nondeductible expenses 1 % 0 % 0 % Research credit, Federal benefit (2 %) (2 %) (1 %) Section 199 - Qualified production activities 0 % (1 %) (1 %) Stock-based compensation (4 %) (13 %) (7 %) Remeasurement of deferred tax liabilities 0 % (20 %) 0 % Effective income tax rate 22 % 3 % 30 % * Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. Our effective income tax rate was 22% and 3% for the years ended December 31, 2018 and 2017, respectively. The lower effective income tax rate for the year ended December 31, 2017 primarily resulted from the remeasurement of our deferred tax balance due to the Tax Act and the reduction in the excess tax benefits recognized related to stock-based compensation. 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: December 31, 2018 2017 *As Adjusted (in thousands) Deferred income tax assets (liabilities): Stock-based compensation $ 1,529 $ 945 Investment in Paycom Payroll Holdings, LLC (73,020 ) (51,821 ) Net operating losses 935 1,677 Federal tax credits 350 70 Noncurrent deferred income tax liabilities, net $ (70,206 ) $ (49,129 ) * Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. At December 31, 2018, we had net operating loss carryforwards for state income tax purposes of approximately $0.9 million which are available to offset future state taxable income that begin expiring in 2030. At December 31, 2018 and 2017, 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. With few exceptions, we are no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2015. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected Quarterly Financial Data (unaudited) | 14. The following tables set forth selected quarterly statements of income data for the periods indicated (in thousands, except share and per share amounts): Quarter Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 Revenues $ 153,916 $ 128,800 $ 133,288 $ 150,332 Operating income $ 51,020 $ 43,037 $ 36,245 $ 43,413 Net income $ 41,160 $ 35,722 $ 28,769 $ 31,414 Earnings per share, basic $ 0.71 $ 0.62 $ 0.50 $ 0.55 Earnings per share, diluted $ 0.70 $ 0.61 $ 0.49 $ 0.54 Weighted average shares outstanding: Basic 57,793,023 57,837,312 57,726,790 57,491,280 Diluted 58,738,732 58,720,785 58,545,061 58,238,231 Quarter Ended March 31, 2017 *As Adjusted June 30, 2017 *As Adjusted September 30, 2017 *As Adjusted December 31, 2017 *As Adjusted Revenues $ 119,508 $ 98,227 $ 101,287 $ 114,025 Operating income $ 52,510 $ 18,792 $ 22,007 $ 36,401 Net income $ 33,694 $ 20,016 $ 20,910 $ 48,866 Earnings per share, basic $ 0.58 $ 0.34 $ 0.36 $ 0.84 Earnings per share, diluted $ 0.57 $ 0.34 $ 0.35 $ 0.83 Weighted average shares outstanding: Basic 57,307,187 57,898,914 58,003,222 58,100,141 Diluted 58,525,980 58,816,442 58,873,502 58,850,271 * Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. SUBSEQUENT EVENTS On January 17, 2019, we issued an aggregate of 512,069 restricted shares of common stock to our executive officers, certain non-executive, non-sales employees and non-executive sales management employees under the LTIP, consisting of 280,960 Market-Based Shares and 231,109 Time-Based Shares. Market-Based Shares will vest 50% on the first date that the Company’s TEV (calculated as defined in the applicable restricted stock award agreement) equals or exceeds $8.65 billion and 50% on the first date that the Company’s TEV equals or exceeds $9.35 billion, in each case provided that (i) such date occurs on or before the sixth anniversary of the grant date and (ii) the recipient is employed by, or providing services to, the Company on the applicable vesting date. Time-Based Shares granted to non-executive employees will vest 25% on a specified initial vesting date and 25% on each of the first three anniversaries of such initial vesting date, provided that the recipient is employed by, or providing services to, the Company or a subsidiary on the applicable vesting date. Time-Based Shares granted to executive officers and sales management employees will vest in three equal annual tranches beginning on a specified initial vesting date and thereafter on the first and second anniversaries of such date, provided that the executive officer or sales management employee is employed by, or providing services to, the Company on the applicable vesting date. On February 13, 2019, the Company recognized $14.9 million of compensation cost in connection with the vesting of 140,218 of the Market-Based Shares issued on January 17, 2019. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation 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 (“U.S. 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. Effective January 1, 2018, we adopted the requirements of Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” as discussed in Note 2. All amounts and disclosures set forth in this Form 10-K have been updated to comply with this new standard, as indicated by the “as adjusted” footnote in applicable tables within the notes to the consolidated financial statements. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on reported net income and did not result in any material change to operating cash flows. |
Adoption of New Pronouncements | Adoption of New Pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). 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. ASU 2014-09 also includes Accounting Standards Codification (“ASC”) 340-40, “Other Assets and Deferred Costs – Contracts with Customers” (“ASC 340-40”), which codifies the guidance on other assets and deferred costs relating to Impact on Previously Reported Results The provisions of ASU 2014-09 do not materially impact the timing or amount of revenue we recognize. The primary impact of adopting the new standard is the manner in which we account for certain costs to obtain new contracts (i.e., selling and commission costs) and costs to fulfill contracts (i.e., costs related to upfront implementation activities performed), which we had previously expensed as incurred. We also determined that the nonrefundable upfront fee charged to our clients, coupled with the option to renew, represents an implied performance obligation in the form of a material right. However, as these fees are deferred and recognized ratably over the ten-year estimated client life, consistent with our prior accounting policy, there is no change in revenue recognition. The following table presents a recast of selected consolidated statement of income line items after giving effect to the adoption of ASU 2014-09: Year Ended December 31, 2017 Year Ended December 31, 2016 As previously reported Adjustments As Adjusted As previously reported Adjustments As Adjusted (in thousands, except per share amounts) Administrative expenses Sales and marketing $ 150,512 $ (39,666 ) $ 110,846 $ 119,258 $ (33,897 ) $ 85,361 General and administrative $ 91,647 $ (11,419 ) $ 80,228 $ 69,046 $ (9,872 ) $ 59,174 Operating income $ 78,625 $ 51,085 $ 129,710 $ 57,971 $ 43,769 $ 101,740 Provision for income taxes $ 9,840 $ (5,594 ) $ 4,246 $ 13,403 $ 17,188 $ 30,591 Net income $ 66,807 $ 56,679 $ 123,486 $ 43,840 $ 26,581 $ 70,421 Earnings per share, basic $ 1.15 $ 0.98 $ 2.13 $ 0.76 $ 0.45 $ 1.21 Earnings per share, diluted $ 1.13 $ 0.97 $ 2.10 $ 0.74 $ 0.45 $ 1.19 The following table presents a recast of selected consolidated balance sheet line items after giving effect to the adoption of ASU 2014-09: December 31, 2017 As previously reported Adjustments As Adjusted (in thousands) Assets Deferred contract costs $ — $ 26,403 $ 26,403 Deferred income tax assets, net $ 3,294 $ (3,294 ) $ — Long-term deferred contract costs $ — $ 171,865 $ 171,865 Liabilities and Stockholders' Equity Deferred income tax liabilities, net $ — $ 49,129 $ 49,129 Additional paid in capital $ 137,234 $ 24,575 $ 161,809 Retained earnings $ 137,255 $ 121,270 $ 258,525 Total stockholders' equity $ 135,402 $ 145,845 $ 281,247 The following table presents a recast of selected consolidated statement of cash flows line items after giving effect to the adoption of ASU 2014-09: Year Ended December 31, 2017 Year Ended December 31, 2016 As previously reported Adjustments As Adjusted As previously reported Adjustments As Adjusted (in thousands) Cash flows from operating activities Net income $ 66,807 $ 56,679 $ 123,486 $ 43,840 $ 26,581 $ 70,421 Stock-based compensation expense 38,542 (2,466 ) 36,076 22,471 (1,750 ) 20,721 Deferred income taxes, net (2,087 ) (5,594 ) (7,681 ) (1,848 ) 17,188 15,340 Deferred contract costs — (48,619 ) (48,619 ) — (42,019 ) (42,019 ) Net cash provided by operating activities $ 130,149 $ — $ 130,149 $ 98,818 $ — $ 98,818 |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. 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 of property and equipment and intangible assets, the life of our client relationships, the fair value of our stock-based awards and the fair value of our financial instruments, intangible assets and goodwill. These estimates are based on historical experience, where applicable, and other assumptions that management believes are reasonable under the circumstances. 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 business 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 recognized 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. Inventory is stated at the lower of cost or market with cost 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. The Company’s inventory obsolescence reserve was $0 as of December 31, 2018, 2017 and 2016, respectively. |
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, 2018, 2017 and 2016, we incurred interest costs of $1.6 million, $1.7 million and $1.3 million, respectively. For the years ended December 31, 2018, 2017 and 2016, interest costs of $0.8 million, $0.8 million and $0.4 million, respectively, were capitalized. |
Internal Use Software | Internal Use Software 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 $22.0 million and $15.8 million during the years ended December 31, 2018 and 2017, respectively, are included in property and equipment. Amortization expense of capitalized software costs were $12.5 million, $7.0 million and $3.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. |
Derivatives | Derivatives In December 2017, we entered into a floating-to-fixed rate swap agreement to limit the exposure to interest rate risk related to our debt. Our interest rate swap effectively converts a portion of the variable interest rate payments to fixed interest rate payments. We do not hold derivative instruments for trading or speculative purposes. The Company has not elected to designate the interest rate swap as a hedge. Changes in the fair value of the derivative are recognized in our consolidated statements of income. |
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 recognized. 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, 2018. For the years ended December 31, 2018, 2017 and 2016, there were no indicators of impairment. Intangible assets with definite 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 definite 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 definite lives, for the years ended December 31, 2018, 2017 and 2016. |
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 by us, and we earn interest on these funds during the interval between receipt and disbursement. These investments are shown in our 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 December 31, 2018 and 2017, the funds held for clients were invested in money market funds, demand deposit accounts, commercial paper and certificates of deposit. Short-term investments in commercial paper and certificates of deposit with an original maturity duration greater than three months are classified as available-for-sale securities, and are also included within the funds held for clients line item on the balance sheet. These available-for-sale securities are recorded on the balance sheet at fair value, which approximates the amortized cost of the securities. Funds held for clients are classified as a current asset in the consolidated balance sheets because the funds are held solely to satisfy the client funds obligation. |
Stock Repurchase Plan | Stock Repurchase Plan In May 2016, our Board of Directors authorized a stock repurchase plan allowing for the repurchase of shares of our common stock 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. Since the initial authorization of the stock repurchase plan, our Board of Directors has amended and extended and authorized new stock repurchase plans from time to time. On February 13, 2018, we announced that our Board of Directors authorized the repurchase of up to an additional $100.0 million of common stock. Most recently, on November 20, 2018, we announced that our Board of Directors authorized the repurchase of up to an additional $150.0 million of our common stock. As of December 31, 2018, there was $162.0 million available for repurchases. Our stock 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, shares withheld for taxes associated with the vesting of restricted stock and other corporate considerations. During the year ended December 31, 2018, we repurchased an aggregate of 1,108,885 shares of our common stock at an average cost of $113.12 per share, including 186,165 shares withheld to satisfy tax withholding obligations for certain employees upon the vesting of restricted common stock. During the year ended December 31, 2017, we repurchased an aggregate of 1,238,577 shares of our common stock at an average cost of $72.45 per share, including 464,302 shares withheld to satisfy tax withholding obligations for certain employees upon the vesting of restricted common stock. |
Revenue Recognition | Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to our clients in an amount that reflects the consideration we expect to be entitled to for those goods or services. Substantially all of our revenues are comprised of revenue from contracts with clients. Sales tax and other applicable taxes are excluded from revenues. The following table disaggregates revenue by recurring and implementation and other revenues, which represent the major categories of revenues: Year Ended December 31, 2018 2017 2016 (in thousands) Revenues Recurring $ 557,255 $ 425,424 $ 323,548 Implementation and other 9,081 7,623 5,593 Total revenues $ 566,336 $ 433,047 $ 329,141 Recurring Revenues 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 form filings and delivery of client payroll checks and reports. Talent acquisition includes our applicant tracking, candidate tracker, background check, on-boarding, e-verify and tax credit services applications. 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 our payroll and tax management, Paycom Pay, expense management, garnishment management and GL Concierge applications. Talent management includes our employee self-service, compensation budgeting, performance management, executive dashboard and Paycom learning and course content applications. HR management includes our document and task management, government and compliance, benefits administration, COBRA administration, personnel action forms, surveys and enhanced Affordable Care Act applications. The performance obligations related to recurring revenues are satisfied 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 as part of the client’s payroll cycle or through direct wire transfer, which minimizes the default risk. The contract period for substantially all contracts associated with these revenues is one month due to the fact that both we and the client have the unilateral right to terminate a wholly unperformed contract without compensating the other party by providing 30 days’ notice of termination. Our payroll application is the foundation of our solution, and all of our clients are required to utilize this application in order to access our other applications. For clients who purchase multiple applications, due to the short-term nature of our contracts, we do not believe it is meaningful to separately assess and identify whether or not each application potentially represents its own, individual, performance obligation as the revenue generated from each application is recognized within the same month as the revenue from the core payroll application. Similarly, we do not believe it is meaningful to individually determine the standalone selling price for each application. We consider the total price charged to a client in a given period to be indicative of the standalone selling price, as the total amount charged is within a reasonable range of prices typically charged for our goods and services for comparable classes of client groups. Implementation and Other Revenues Implementation and other revenues consist of nonrefundable upfront conversion fees which are charged to new clients to offset the expense of new client set-up as well as revenues from the sale of time clocks as part of our employee time and attendance services. Although these revenues are related to our recurring revenues, they represent distinct performance obligations. Implementation activities primarily represent administrative activities that allow us to fulfill future performance obligations for our clients and do not represent services transferred to the client. However, the nonrefundable upfront fee charged to our clients results in an implied performance obligation in the form of a material right to the client related to the client’s option to renew at the end of each 30-day contract period. Further, given that all other services within the contract are sold at a total price indicative of the standalone selling price, coupled with the fact that the upfront fees are consistent with upfront fees charged in similar contracts that we have with clients, the standalone selling price of the client’s option to renew the contract approximates the dollar amount of the nonrefundable upfront fee. The nonrefundable upfront fee is typically included on the client’s first invoice, and is deferred and recognized ratably over the estimated renewal period (i.e. the ten-year estimated client life). Revenues from the sale of time clocks are recognized when control is transferred to the client upon delivery of the product. We estimate the standalone selling price for the time clocks by maximizing the use of observable inputs such as our specific pricing practices for time clocks. |
Contract Balances | Contract Balances The timing of revenue recognition for recurring services is consistent with the invoicing of clients as they both occur during the respective client payroll period for which the services are provided. Therefore, we do not recognize a contract asset or liability resulting from the timing of revenue recognition and invoicing. We have elected to apply the practical expedient not to disclose the value of unsatisfied performance obligations for contracts that are less than one year in length. For these contracts, we determined that the core, non-material right, performance obligations are generally satisfied in full by the end of each reporting period as most of our contracts with clients start at the beginning of a calendar month. However, this expedient cannot be applied to initial 30-day contracts with a client that also contain an implied performance obligation in the form of a material right as the material right performance obligation is being recognized over the expected client life which exceeds one year. For the material right performance obligation, as discussed above, we defer the amounts allocated and recognize them ratably over the estimated client life of ten years. Finally, we have also elected to apply the transition expedient that allows for all reporting periods presented before the date of initial application to exclude disclosure of the amounts of transaction price allocated to the remaining unsatisfied performance obligations. Accordingly, the table below is only for the year ended December 31, 2018. Changes in deferred revenue related to material right performance obligations were as follows: Year Ended December 31, 2018 (in thousands) Balance, beginning of period $ 51,624 Deferral of revenue 20,925 Recognition of unearned revenue (7,898 ) Balance, end of period $ 64,651 We expect to recognize $9.0 million of deferred revenue related to material right performance obligations in 2019 and 2020, and $46.7 million of such deferred revenue thereafter. |
Assets Recognized From Costs To Obtain And Costs To Fulfill Revenue Contracts | Assets Recognized from the Costs to Obtain and Costs to Fulfill Revenue Contracts We recognize an asset for the incremental costs of obtaining a contract with a client if we expect the amortization period to be longer than one year. We have determined that certain selling and commission costs meet the capitalization criteria under ASC 340-40, which prior to the adoption of ASU 2014-09 were expensed as incurred. We also recognize an asset for the costs to fulfill a contract with a client if such costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered. We have determined that substantially all costs related to implementation activities are administrative in nature and also meet the capitalization criteria under ASC 340-40. These capitalized costs to fulfill principally relate to upfront direct costs that are expected to be recovered through margin and that enhance our ability to satisfy future performance obligations. The assets related to both costs to obtain, and costs to fulfill, contracts with clients are accounted for utilizing a portfolio approach, and are capitalized and amortized over the expected period of benefit, which we have determined to be the estimated client relationship of ten years. The expected period of benefit has been determined to be the estimated life of the client relationship primarily because we incur no new costs to obtain, or costs to fulfill, a contract upon renewal of such contract. Additional commission costs may be incurred when an existing client purchases additional applications; however, these commission costs relate solely to the additional applications purchased and are not related to contract renewal. Furthermore, additional fulfillment costs associated with existing clients purchasing additional applications are minimized by our seamless single-database platform. These assets are presented as deferred contract costs in the accompanying consolidated balance sheets. Amortization expense related to costs to obtain and costs to fulfill a contract are included in the “sales and marketing” and “general and administrative” line items in the accompanying consolidated statements of income. The following table presents the asset balance and related amortization expense for these contract costs: As of and for the Year Ended December 31, 2018 Beginning Capitalization Amortization Ending Balance of Costs Balance (in thousands) Costs to obtain a contract $ 126,207 $ 51,858 $ (19,076 ) $ 158,989 Costs to fulfill a contract $ 72,061 $ 41,224 $ (11,529 ) $ 101,756 |
Cost of Revenues | Cost of Revenues Our costs and expenses applicable to total revenues represent 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, 2018, 2017 and 2016 were $16.8 million, $7.9 million and $4.9 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 recognized on a net basis, and therefore, excluded from revenues. For the years ended December 31, 2018, 2017 and 2016, sales taxes collected and remitted were $6.5 million, $5.0 million and $4.3 million, respectively. |
Employee Stock-Based Compensation | Employee Stock-Based Compensation Time-based stock compensation awards to employees are recognized on a pro-rata basis 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 on a pro-rata basis 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 is 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 recognized 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 recognize 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 do not meet this threshold. Our policy is to recognize interest and penalties, if any, related to uncertain tax positions as a component of general and administrative expenses. We have one open income tax examination as of December 31, 2018 with the state of Virginia. However, we do not expect the result of the examination to impact income tax expense. We file income tax returns with the United States federal government and various state jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2015. |
Seasonality | Seasonality Our revenues are seasonal in nature. Recurring revenues include revenues relating to the annual processing of payroll forms, such as Form W-2, Form 1099, and Form 1095 and revenues from processing unscheduled payroll runs (such as bonuses) for our clients. Because payroll forms are typically processed in the first quarter of the year, first quarter revenues and margins are generally higher than in subsequent quarters. These seasonal fluctuations in revenues can also have an impact on gross profits. Historical results impacted by these seasonal trends should not be considered a reliable indicator of our future results of operations. |
Recent Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The purpose of this new 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 us beginning January 1, 2019, which we plan to adopt using the modified retrospective method and the transition relief guidance provided by the FASB in ASU 2018-11. Under this adoption method, we will not restate comparative prior periods and we will carry forward the assessment of whether our contracts are or contain leases, the classification of our leases and the remaining lease terms. Based on our current portfolio of leases, approximately $21.6 million of lease assets and liabilities will be recognized on our balance sheet upon adoption, primarily relating to operating leases for real estate. Under the transition relief guidance, we have elected the lease vs. non-lease components practical expedient relating to the asset class of real estate, the short-term lease exemption practical expedient and the package of practical expedients. The Company has determined that it will not elect the practical expedient related to hindsight. In connection with the adoption of this standard, the Company is updating its control framework for any new internal controls related to leases that will be required, as well as any changes to existing controls, effective with the January 1, 2019 adoption. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Reflection of New Adopted Standards in Selected Consolidated Statements Line Items | The following table presents a recast of selected consolidated statement of income line items after giving effect to the adoption of ASU 2014-09: Year Ended December 31, 2017 Year Ended December 31, 2016 As previously reported Adjustments As Adjusted As previously reported Adjustments As Adjusted (in thousands, except per share amounts) Administrative expenses Sales and marketing $ 150,512 $ (39,666 ) $ 110,846 $ 119,258 $ (33,897 ) $ 85,361 General and administrative $ 91,647 $ (11,419 ) $ 80,228 $ 69,046 $ (9,872 ) $ 59,174 Operating income $ 78,625 $ 51,085 $ 129,710 $ 57,971 $ 43,769 $ 101,740 Provision for income taxes $ 9,840 $ (5,594 ) $ 4,246 $ 13,403 $ 17,188 $ 30,591 Net income $ 66,807 $ 56,679 $ 123,486 $ 43,840 $ 26,581 $ 70,421 Earnings per share, basic $ 1.15 $ 0.98 $ 2.13 $ 0.76 $ 0.45 $ 1.21 Earnings per share, diluted $ 1.13 $ 0.97 $ 2.10 $ 0.74 $ 0.45 $ 1.19 The following table presents a recast of selected consolidated balance sheet line items after giving effect to the adoption of ASU 2014-09: December 31, 2017 As previously reported Adjustments As Adjusted (in thousands) Assets Deferred contract costs $ — $ 26,403 $ 26,403 Deferred income tax assets, net $ 3,294 $ (3,294 ) $ — Long-term deferred contract costs $ — $ 171,865 $ 171,865 Liabilities and Stockholders' Equity Deferred income tax liabilities, net $ — $ 49,129 $ 49,129 Additional paid in capital $ 137,234 $ 24,575 $ 161,809 Retained earnings $ 137,255 $ 121,270 $ 258,525 Total stockholders' equity $ 135,402 $ 145,845 $ 281,247 The following table presents a recast of selected consolidated statement of cash flows line items after giving effect to the adoption of ASU 2014-09: Year Ended December 31, 2017 Year Ended December 31, 2016 As previously reported Adjustments As Adjusted As previously reported Adjustments As Adjusted (in thousands) Cash flows from operating activities Net income $ 66,807 $ 56,679 $ 123,486 $ 43,840 $ 26,581 $ 70,421 Stock-based compensation expense 38,542 (2,466 ) 36,076 22,471 (1,750 ) 20,721 Deferred income taxes, net (2,087 ) (5,594 ) (7,681 ) (1,848 ) 17,188 15,340 Deferred contract costs — (48,619 ) (48,619 ) — (42,019 ) (42,019 ) Net cash provided by operating activities $ 130,149 $ — $ 130,149 $ 98,818 $ — $ 98,818 |
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 |
Summary of Disaggregates Major Categories of Revenues | The following table disaggregates revenue by recurring and implementation and other revenues, which represent the major categories of revenues: Year Ended December 31, 2018 2017 2016 (in thousands) Revenues Recurring $ 557,255 $ 425,424 $ 323,548 Implementation and other 9,081 7,623 5,593 Total revenues $ 566,336 $ 433,047 $ 329,141 |
Summary of Changes in Deferred Revenue Related to Material Right Performance Obligations | Changes in deferred revenue related to material right performance obligations were as follows: Year Ended December 31, 2018 (in thousands) Balance, beginning of period $ 51,624 Deferral of revenue 20,925 Recognition of unearned revenue (7,898 ) Balance, end of period $ 64,651 |
Summary of Asset Balances and Related Amortization Expense For Contract Costs | The following table presents the asset balance and related amortization expense for these contract costs: As of and for the Year Ended December 31, 2018 Beginning Capitalization Amortization Ending Balance of Costs Balance (in thousands) Costs to obtain a contract $ 126,207 $ 51,858 $ (19,076 ) $ 158,989 Costs to fulfill a contract $ 72,061 $ 41,224 $ (11,529 ) $ 101,756 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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: December 31, 2018 2017 (in thousands) Property and equipment Buildings $ 101,421 $ 60,441 Software and capitalized software costs 66,634 41,996 Computer equipment 39,492 27,928 Rental clocks 16,950 13,131 Furniture, fixtures and equipment 16,474 7,528 Leasehold improvements 1,274 767 Vehicles 74 — 242,319 151,791 Less: accumulated depreciation and amortization (82,969 ) (53,525 ) 159,350 98,266 Construction in progress 8,589 40,446 Land 9,023 8,993 Property and equipment, net $ 176,962 $ 147,705 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Components of Intangible Assets | All of our intangible assets other than goodwill are considered to have definite lives and, as such, are subject to amortization. The components of intangible assets are as follows: December 31, 2018 Weighted Average Remaining Accumulated Useful Life Gross Amortization Net (Years) (dollars in thousands) Intangibles: Trade name 3.5 $ 3,194 $ (2,449 ) $ 745 Total $ 3,194 $ (2,449 ) $ 745 December 31, 2017 Weighted Average Remaining Accumulated Useful Life Gross Amortization Net (Years) (dollars in thousands) Intangibles: Trade name 4.5 $ 3,194 $ (2,236 ) $ 958 Total $ 3,194 $ (2,236 ) $ 958 |
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 (in thousands): Year Ending December 31, Amortization 2019 $ 213 2020 213 2021 213 2022 106 Total $ 745 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Our long-term debt consisted of the following: December 31, 2018 2017 (in thousands) Net term note to bank due September 7, 2025 $ 34,389 $ 35,302 Total long-term debt (including current portion) 34,389 35,302 Less: Current portion (1,775 ) (888 ) Total long-term debt, net $ 32,614 $ 34,414 |
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, 2018 are as follows (in thousands): Year Ending December 31, 2019 $ 1,775 2020 1,775 2021 1,775 2022 1,775 2023 1,775 Thereafter 25,738 Total $ 34,613 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Major Categories of Assets and Liabilities Measured at Fair Value on Recurring Basis | Included in the following table are the Company’s major categories of assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 and 2017: December 31, 2018 Level 1 Level 2 Level 3 Total Assets: (in thousands) Commercial paper $ — $ 21,041 $ — $ 21,041 Certificates of deposit $ — $ 6,000 $ — $ 6,000 Interest rate swap $ — $ 17 $ — $ 17 December 31, 2017 Level 1 Level 2 Level 3 Total Assets: (in thousands) Commercial paper $ — $ 14,918 $ — $ 14,918 Certificates of deposit $ — $ 21,500 $ — $ 21,500 Liabilities: Interest rate swap $ — $ 649 $ — $ 649 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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 earnings per share (in thousands, except share and per share amounts): Year Ended December 31, 2018 2017 *As Adjusted 2016 *As Adjusted Numerator: Net income $ 137,065 $ 123,486 $ 70,421 Less: income allocable to participating securities (159 ) (315 ) (535 ) Income allocable to common shares $ 136,906 $ 123,171 $ 69,886 Add back: undistributed earnings allocable to participating securities 159 315 535 Less: undistributed earnings reallocated to participating securities (156 ) (310 ) (535 ) Numerator for diluted earnings per share $ 136,909 $ 123,176 $ 69,886 Denominator: Basic weighted average shares outstanding 57,711,315 57,839,155 57,550,204 Dilutive effect of unvested restricted stock 871,171 950,864 1,417,895 Diluted weighted average shares outstanding 58,582,486 58,790,019 58,968,099 Earnings per share: Basic $ 2.37 $ 2.13 $ 1.21 Diluted $ 2.34 $ 2.10 $ 1.19 * Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Stockholders' Equity and Stoc_2
Stockholders' Equity and Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Nonvested Restricted Stock Awards Activity | The following table summarizes restricted stock awards activity for the year ended December 31, 2018: Time-Based Shares Market-Based Shares Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Unvested shares of restricted stock outstanding at December 31, 2017 888,680 $ 42.17 — $ — Granted 337,050 99.76 284,118 82.84 Vested (314,224 ) 34.14 (283,080 ) 82.84 Forfeited (105,037 ) 56.26 (1,038 ) 82.64 Unvested shares of restricted stock outstanding at December 31, 2018 806,469 $ 67.54 — $ — |
Non-cash Stock-based Compensation Resulting From Restricted Stock Awards | The following table presents non-cash stock-based compensation expense resulting from restricted stock awards, which is included in the following line items in the accompanying consolidated statements of income for the years ended December 31, 2018, 2017 and 2016: Year Ended December 31, 2018 2017 *As Adjusted 2016 *As Adjusted (in thousands) Operating expense $ 4,041 $ 3,950 $ 2,217 Sales and marketing 7,510 5,023 3,028 Research and development 3,013 1,912 836 General and administrative 21,847 25,162 14,715 Total non-cash stock-based compensation expense $ 36,411 $ 36,047 $ 20,796 |
Restricted Stock [Member] | |
Summary of Grant-Date Fair Values of Restricted Stock Granted and Related Assumptions | The following table presents a summary of the grant-date fair values of restricted stock granted during the years ended December 31, 2018, 2017 and 2016 and the related assumptions: Year Ended December 31, 2018 2017 2016 Grant-date fair value of restricted stock $81.14 - $122.83 $46.78 - $60.67 $23.15 - $49.34 Risk-free interest rate 2.54% 1.85% 1.28% - 1.36% Estimated volatility 25.0% 23.0% 21.0% - 23.0% Expected life (in years) 2.0 2.3 2.7 |
Market-Based Shares [Member] | |
Summary of Market-Based Shares Vesting Activity | The following table summarizes vesting activity for Market-Based Shares during the year ended December 31, 2018, the associated compensation cost recognized in connection with the vesting event and the number of shares withheld to satisfy tax withholding obligations: Vesting Condition Date Vested Number of Shares Vested Compensation Cost Recognized Upon Vesting Shares Withheld for Taxes 1 Market-based (TEV = $5.9 billion) March 14, 2018 141,599 $9.7 million 54,000 Market-based (TEV = $6.2 billion) March 23, 2018 141,481 $10.1 million 54,909 1 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 were as follows (in thousands): Year Ending December 31, 2019 $ 8,315 2020 6,900 2021 5,224 2022 4,478 2023 2,839 Thereafter 502 Total minimum lease payments $ 28,258 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax Expense | The items comprising income tax expense are as follows: Year Ended December 31, 2018 2017 *As Adjusted 2016 *As Adjusted (in thousands) Provision for current income taxes Federal $ 12,414 $ 10,136 $ 12,207 State 4,155 1,791 3,044 Total provision for current income taxes 16,569 11,927 15,251 Provision (benefit) for deferred income taxes, net Federal 14,365 (3,865 ) 12,708 State 6,712 (3,816 ) 2,632 Total benefit for deferred income taxes, net 21,077 (7,681 ) 15,340 Total provision for income taxes $ 37,646 $ 4,246 $ 30,591 * Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
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, 2018 2017 *As Adjusted 2016 *As Adjusted Federal statutory tax rate 21 % 35 % 35 % Increase (decrease) resulting from: State income taxes, net of Federal income tax benefit 6 % 4 % 4 % Nondeductible expenses 1 % 0 % 0 % Research credit, Federal benefit (2 %) (2 %) (1 %) Section 199 - Qualified production activities 0 % (1 %) (1 %) Stock-based compensation (4 %) (13 %) (7 %) Remeasurement of deferred tax liabilities 0 % (20 %) 0 % Effective income tax rate 22 % 3 % 30 % * Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Net Deferred Tax Assets and Liabilities | The significant components of our deferred tax assets and liabilities were as follows: December 31, 2018 2017 *As Adjusted (in thousands) Deferred income tax assets (liabilities): Stock-based compensation $ 1,529 $ 945 Investment in Paycom Payroll Holdings, LLC (73,020 ) (51,821 ) Net operating losses 935 1,677 Federal tax credits 350 70 Noncurrent deferred income tax liabilities, net $ (70,206 ) $ (49,129 ) * Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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 (in thousands, except share and per share amounts): Quarter Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 Revenues $ 153,916 $ 128,800 $ 133,288 $ 150,332 Operating income $ 51,020 $ 43,037 $ 36,245 $ 43,413 Net income $ 41,160 $ 35,722 $ 28,769 $ 31,414 Earnings per share, basic $ 0.71 $ 0.62 $ 0.50 $ 0.55 Earnings per share, diluted $ 0.70 $ 0.61 $ 0.49 $ 0.54 Weighted average shares outstanding: Basic 57,793,023 57,837,312 57,726,790 57,491,280 Diluted 58,738,732 58,720,785 58,545,061 58,238,231 Quarter Ended March 31, 2017 *As Adjusted June 30, 2017 *As Adjusted September 30, 2017 *As Adjusted December 31, 2017 *As Adjusted Revenues $ 119,508 $ 98,227 $ 101,287 $ 114,025 Operating income $ 52,510 $ 18,792 $ 22,007 $ 36,401 Net income $ 33,694 $ 20,016 $ 20,910 $ 48,866 Earnings per share, basic $ 0.58 $ 0.34 $ 0.36 $ 0.84 Earnings per share, diluted $ 0.57 $ 0.34 $ 0.35 $ 0.83 Weighted average shares outstanding: Basic 57,307,187 57,898,914 58,003,222 58,100,141 Diluted 58,525,980 58,816,442 58,873,502 58,850,271 * Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Detail) | Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2018USD ($)Segment$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($) | Nov. 20, 2018USD ($) | Feb. 13, 2018USD ($) | Jan. 01, 2016USD ($) | Dec. 31, 2015USD ($) | |
Summary Of Significant Accounting Policy [Line Items] | |||||||||||
Cumulative pre-tax adjustment, increase in stockholders’ equity | [1] | $ 62,585,000 | |||||||||
Expected life of client relationships | 10 years | ||||||||||
Number of operating segments | Segment | 1 | ||||||||||
Inventory obsolescence reserve | $ 0 | $ 0 | $ 0 | ||||||||
Interest costs incurred | 1,600,000 | 1,700,000 | 1,300,000 | ||||||||
Interest costs capitalized | 800,000 | 800,000 | 400,000 | ||||||||
Total capitalized payroll costs related to internal use software projects | 22,000,000 | 15,800,000 | |||||||||
Amortization expense of capitalized software costs | 12,500,000 | 7,000,000 | 3,600,000 | ||||||||
Goodwill impairment amount | $ 0 | $ 0 | $ 0 | 0 | 0 | 0 | |||||
Impairment of intangible assets with definite lives | 0 | 0 | 0 | ||||||||
Impairment of long-lived assets | $ 0 | 0 | 0 | ||||||||
Revenue practical expedient remaining performance obligation description | We have elected to apply the practical expedient not to disclose the value of unsatisfied performance obligations for contracts that are less than one year in length. However, this expedient cannot be applied to initial 30-day contracts with a client that also contain an implied performance obligation in the form of a material right as the material right performance obligation is being recognized over the expected client life which exceeds one year. | ||||||||||
Revenue practical expedient performance obligation estimated client life | 10 years | ||||||||||
Deferred revenue expect to recognize description | We expect to recognize $9.0 million of deferred revenue related to material right performance obligations in 2019 and 2020, and $46.7 million of such deferred revenue thereafter. | ||||||||||
Advertising costs | $ 16,800,000 | 7,900,000 | 4,900,000 | ||||||||
Sales taxes | 6,500,000 | $ 5,000,000 | $ 4,300,000 | ||||||||
Stock Repurchase Plan [Member] | |||||||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||||||
Available authorized repurchase amount | $ 162,000,000 | ||||||||||
Number of common stocks repurchased during the period | shares | 1,108,885 | 1,238,577 | |||||||||
Stock repurchased, average costs per share | $ / shares | $ 113.12 | $ 72.45 | |||||||||
Stock Repurchase Plan [Member] | Restricted Stock [Member] | |||||||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||||||
Shares withheld to satisfy tax withholding obligations | shares | 186,165 | 464,302 | |||||||||
Maximum [Member] | Stock Repurchase Plan [Member] | |||||||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||||||
Stock repurchase plan, authorized amount | $ 150,000,000 | $ 100,000,000 | |||||||||
Internal use Software [Member] | |||||||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||||||
Capitalized and amortized period | 3 years | ||||||||||
Accounting Standards Update 2014-09 [Member] | |||||||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||||||
Cumulative pre-tax adjustment, increase in stockholders’ equity | $ 103,400,000 | ||||||||||
Accounting Standards Update 2016-02 [Member] | |||||||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||||||
Estimated operating lease assets and liabilities to be recognized upon adoption | $ 21,600,000 | ||||||||||
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Reflection of New Adopted Standards in Selected Consolidated Statement of Operations Line Items (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | [1] | Sep. 30, 2017 | [1] | Jun. 30, 2017 | [1] | Mar. 31, 2017 | [1] | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||||
Administrative expenses | ||||||||||||||||||
Sales and marketing | $ 143,881 | $ 110,846 | [1] | $ 85,361 | [1] | |||||||||||||
General and administrative | 96,605 | 80,228 | [1] | 59,174 | [1] | |||||||||||||
Operating income | $ 43,413 | $ 36,245 | $ 43,037 | $ 51,020 | $ 36,401 | $ 22,007 | $ 18,792 | $ 52,510 | 173,715 | 129,710 | [1] | 101,740 | [1] | |||||
Provision for income taxes | 37,646 | 4,246 | [1] | 30,591 | [1] | |||||||||||||
Net income | $ 31,414 | $ 28,769 | $ 35,722 | $ 41,160 | $ 48,866 | $ 20,910 | $ 20,016 | $ 33,694 | $ 137,065 | [1] | $ 123,486 | [1] | $ 70,421 | [1] | ||||
Earnings per share, basic | $ 0.55 | $ 0.50 | $ 0.62 | $ 0.71 | $ 0.84 | $ 0.36 | $ 0.34 | $ 0.58 | $ 2.37 | $ 2.13 | [1] | $ 1.21 | [1] | |||||
Earnings per share, diluted | $ 0.54 | $ 0.49 | $ 0.61 | $ 0.70 | $ 0.83 | $ 0.35 | $ 0.34 | $ 0.57 | $ 2.34 | $ 2.10 | [1] | $ 1.19 | [1] | |||||
As Previously Reported [Member] | ||||||||||||||||||
Administrative expenses | ||||||||||||||||||
Sales and marketing | $ 150,512 | $ 119,258 | ||||||||||||||||
General and administrative | 91,647 | 69,046 | ||||||||||||||||
Operating income | 78,625 | 57,971 | ||||||||||||||||
Provision for income taxes | 9,840 | 13,403 | ||||||||||||||||
Net income | $ 66,807 | $ 43,840 | ||||||||||||||||
Earnings per share, basic | $ 1.15 | $ 0.76 | ||||||||||||||||
Earnings per share, diluted | $ 1.13 | $ 0.74 | ||||||||||||||||
Adjustments [Member] | ||||||||||||||||||
Administrative expenses | ||||||||||||||||||
Sales and marketing | $ (39,666) | $ (33,897) | ||||||||||||||||
General and administrative | (11,419) | (9,872) | ||||||||||||||||
Operating income | 51,085 | 43,769 | ||||||||||||||||
Provision for income taxes | (5,594) | 17,188 | ||||||||||||||||
Net income | $ 56,679 | $ 26,581 | ||||||||||||||||
Earnings per share, basic | $ 0.98 | $ 0.45 | ||||||||||||||||
Earnings per share, diluted | $ 0.97 | $ 0.45 | ||||||||||||||||
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Summary of Reflection of New Adopted Standards in Selected Consolidated Balance Sheet Line Items (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Assets | ||||||
Deferred contract costs | $ 35,286 | $ 26,403 | [1] | |||
Long-term deferred contract costs | 225,459 | 171,865 | [1] | |||
Liabilities and Stockholders' Equity | ||||||
Deferred income tax liabilities, net | 49,129 | |||||
Additional paid in capital | 203,680 | 161,809 | [1] | |||
Retained earnings | 395,590 | 258,525 | [1] | |||
Total stockholders' equity | [1] | $ 334,753 | 281,247 | $ 205,693 | $ 98,314 | |
As Previously Reported [Member] | ||||||
Assets | ||||||
Deferred income tax assets, net | 3,294 | |||||
Liabilities and Stockholders' Equity | ||||||
Additional paid in capital | 137,234 | |||||
Retained earnings | 137,255 | |||||
Total stockholders' equity | 135,402 | |||||
Adjustments [Member] | ||||||
Assets | ||||||
Deferred contract costs | 26,403 | |||||
Deferred income tax assets, net | (3,294) | |||||
Long-term deferred contract costs | 171,865 | |||||
Liabilities and Stockholders' Equity | ||||||
Deferred income tax liabilities, net | 49,129 | |||||
Additional paid in capital | 24,575 | |||||
Retained earnings | 121,270 | |||||
Total stockholders' equity | $ 145,845 | |||||
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Summary of Reflection of New Adopted Standards in Selected Consolidated Statement of Cash Flows (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | [1] | Sep. 30, 2017 | [1] | Jun. 30, 2017 | [1] | Mar. 31, 2017 | [1] | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||||
Cash flows from operating activities | ||||||||||||||||||
Net income | $ 31,414 | $ 28,769 | $ 35,722 | $ 41,160 | $ 48,866 | $ 20,910 | $ 20,016 | $ 33,694 | $ 137,065 | [1] | $ 123,486 | [1] | $ 70,421 | [1] | ||||
Stock-based compensation expense | 36,576 | 36,076 | [1] | 20,721 | [1] | |||||||||||||
Deferred income taxes, net | 21,077 | (7,681) | [1] | 15,340 | [1] | |||||||||||||
Deferred contract costs | $ (60,730) | (48,619) | [1] | (42,019) | [1] | |||||||||||||
Net cash provided by operating activities | 130,149 | 98,818 | ||||||||||||||||
As Previously Reported [Member] | ||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||
Net income | 66,807 | 43,840 | ||||||||||||||||
Stock-based compensation expense | 38,542 | 22,471 | ||||||||||||||||
Deferred income taxes, net | (2,087) | (1,848) | ||||||||||||||||
Net cash provided by operating activities | 130,149 | 98,818 | ||||||||||||||||
Adjustments [Member] | ||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||
Net income | 56,679 | 26,581 | ||||||||||||||||
Stock-based compensation expense | (2,466) | (1,750) | ||||||||||||||||
Deferred income taxes, net | (5,594) | 17,188 | ||||||||||||||||
Deferred contract costs | $ (48,619) | $ (42,019) | ||||||||||||||||
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Estimated Useful Lives (Detail) | 12 Months Ended |
Dec. 31, 2018 | |
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 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Summary of Disaggregates Major Categories of Revenues (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | [1] | Dec. 31, 2016 | [1] | |
Revenues | |||||
Total revenues | $ 566,336 | $ 433,047 | $ 329,141 | ||
Recurring [Member] | |||||
Revenues | |||||
Total revenues | 557,255 | 425,424 | 323,548 | ||
Implementation and Other [Member] | |||||
Revenues | |||||
Total revenues | $ 9,081 | $ 7,623 | $ 5,593 | ||
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Summary of Changes in Deferred Revenue Related to Material Right Performance Obligations (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Revenue From Contract With Customer [Abstract] | |
Balance, beginning of period | $ 51,624 |
Deferral of revenue | 20,925 |
Recognition of unearned revenue | (7,898) |
Balance, end of period | $ 64,651 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Additional Information (Detail1) $ in Millions | Dec. 31, 2018USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Deferred revenue expect to recognize amount | $ 9 |
Deferred revenue expect to recognize period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Deferred revenue expect to recognize amount | $ 9 |
Deferred revenue expect to recognize period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Deferred revenue expect to recognize amount | $ 46.7 |
Deferred revenue expect to recognize period |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Summary of Asset Balances and Related Amortization Expense For Contract Costs (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Costs to Obtain a Contract [Member] | |
Capitalized Contract Cost [Line Items] | |
Beginning Balance | $ 126,207 |
Capitalization of Costs | 51,858 |
Amortization | (19,076) |
Ending Balance | 158,989 |
Costs to Fulfill a Contract [Member] | |
Capitalized Contract Cost [Line Items] | |
Beginning Balance | 72,061 |
Capitalization of Costs | 41,224 |
Amortization | (11,529) |
Ending Balance | $ 101,756 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment and Associated Accumulated Depreciation and Amortization (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | |
Property and Equipment [Line Items] | |||
Property and equipment, gross | $ 242,319 | $ 151,791 | |
Less: accumulated depreciation and amortization | (82,969) | (53,525) | |
Property and equipment, net | 176,962 | 147,705 | [1] |
Buildings [Member] | |||
Property and Equipment [Line Items] | |||
Property and equipment, gross | 101,421 | 60,441 | |
Software and Capitalized Software Costs [Member] | |||
Property and Equipment [Line Items] | |||
Property and equipment, gross | 66,634 | 41,996 | |
Computer Equipment [Member] | |||
Property and Equipment [Line Items] | |||
Property and equipment, gross | 39,492 | 27,928 | |
Rental Clocks [Member] | |||
Property and Equipment [Line Items] | |||
Property and equipment, gross | 16,950 | 13,131 | |
Furniture, Fixtures and Equipment [Member] | |||
Property and Equipment [Line Items] | |||
Property and equipment, gross | 16,474 | 7,528 | |
Leasehold Improvements [Member] | |||
Property and Equipment [Line Items] | |||
Property and equipment, gross | 1,274 | 767 | |
Vehicles [Member] | |||
Property and Equipment [Line Items] | |||
Property and equipment, gross | 74 | ||
Excluded Land and Construction in Process [Member] | |||
Property and Equipment [Line Items] | |||
Property and equipment, net | 159,350 | 98,266 | |
Land [Member] | |||
Property and Equipment [Line Items] | |||
Property and equipment, net | 9,023 | 8,993 | |
Construction in Progress [Member] | |||
Property and Equipment [Line Items] | |||
Property and equipment, net | $ 8,589 | $ 40,446 | |
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Property and Equipment - Additi
Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Property and Equipment [Line Items] | |||||
Computer software development costs capitalized | $ 22,000 | $ 15,800 | |||
Retainage amount included in construction in progress | 100 | 2,000 | |||
Interest cost Paid | 1,600 | 1,700 | $ 1,300 | ||
Interest Costs Capitalized | 800 | 800 | 400 | ||
Depreciation and amortization | 15,125 | 9,805 | [1] | 7,834 | [1] |
Property and Equipment [Member] | |||||
Property and Equipment [Line Items] | |||||
Depreciation and amortization | $ 29,400 | $ 18,500 | $ 12,000 | ||
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, Net - Additional Information (Detail) - USD ($) | Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |||||||
Goodwill | $ 51,889,000 | $ 51,889,000 | [1] | ||||
Goodwill impairment amount | $ 0 | $ 0 | $ 0 | 0 | 0 | $ 0 | |
Amortization of intangible assets | $ 200,000 | $ 900,000 | $ 1,600,000 | ||||
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, Net - Components of Intangible Assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Finite Lived Intangible Assets [Line Items] | |||
Gross | $ 3,194 | $ 3,194 | |
Accumulated Amortization | (2,449) | (2,236) | |
Net | 745 | 958 | [1] |
Trade Name [Member] | |||
Finite Lived Intangible Assets [Line Items] | |||
Gross | 3,194 | 3,194 | |
Accumulated Amortization | (2,449) | (2,236) | |
Net | $ 745 | $ 958 | |
Weighted average remaining useful life | 3 years 6 months | 4 years 6 months | |
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets, Net - Schedule of Estimated Amortization Expense of Intangible Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | [1] |
Goodwill And Intangible Assets Disclosure [Abstract] | |||
2,019 | $ 213 | ||
2,020 | 213 | ||
2,021 | 213 | ||
2,022 | 106 | ||
Net | $ 745 | $ 958 | |
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule Of Capitalization Longterm Debt [Line Items] | |||
Total long-term debt (including current portion) | $ 34,389 | $ 35,302 | |
Less: Current portion | (1,775) | (888) | [1] |
Total long-term debt, net | 32,614 | 34,414 | [1] |
2025 Consolidated Loan [Member] | |||
Schedule Of Capitalization Longterm Debt [Line Items] | |||
Term note to bank | $ 34,389 | $ 35,302 | |
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Detail) - USD ($) | Sep. 12, 2018 | Feb. 12, 2018 | Dec. 07, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Revolving Credit Agreement [Member] | |||||
Debt Instrument [Line Items] | |||||
Loan, principal amount | $ 50,000,000 | ||||
Debt instrument, restrictive covenants | maintain a fixed charge coverage ratio of not less than 1.25 to 1.0 and a funded indebtedness to EBITDA ratio of not greater than 2.0 to 1.0. | ||||
Line of credit facility agreement date | Feb. 12, 2018 | ||||
Line of credit facility, maximum borrowing capacity | $ 100,000,000 | ||||
Line of credit facility, maturity date | Feb. 12, 2020 | ||||
Line of credit facility, interest rate description | Borrowings under the Facility will generally bear interest at a prime rate plus 1.0% or, at our option, an adjusted LIBOR rate for the interest period in effect for such borrowing plus 1.5%. | ||||
Line of credit facility, borrowings outstanding | $ 0 | ||||
Revolving Credit Agreement [Member] | Swingline Loans [Member] | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 5,000,000 | ||||
Revolving Credit Agreement [Member] | Letters of Credit [Member] | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 2,500,000 | ||||
Revolving Credit Agreement [Member] | Prime Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, outstanding borrowings interest | 1.00% | ||||
Revolving Credit Agreement [Member] | LIBOR [Member] | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, outstanding borrowings interest | 1.50% | ||||
Maximum [Member] | Revolving Credit Agreement [Member] | |||||
Debt Instrument [Line Items] | |||||
Fixed charge coverage ratio required by covenants | 125.00% | ||||
Minimum [Member] | Revolving Credit Agreement [Member] | |||||
Debt Instrument [Line Items] | |||||
Funded indebtedness to EBITDA ratio required by covenants | 100.00% | ||||
New Credit Agreement [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, restrictive covenants | maintain a fixed charge coverage ratio of not less than 1.25 to 1.0 and a funded indebtedness to EBITDA ratio of not greater than 2.0 to 1.0. | ||||
New Credit Agreement [Member] | Term Loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument maturity date | Sep. 7, 2025 | ||||
Term loan, maturity date description | The Term Loans mature on September 7, 2025 and bear interest, at our option, at either (a) a prime rate plus 1.0% or (b) an adjusted LIBOR rate for the interest period in effect for such Term Loan plus 1.5%. | ||||
New Credit Agreement [Member] | Term Loan [Member] | Prime Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument basis spread on variable rate | 1.00% | ||||
New Credit Agreement [Member] | Term Loan [Member] | Adjusted London Interbank Offered Rate LIBOR [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument basis spread on variable rate | 1.50% | ||||
New Credit Agreement [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Fixed charge coverage ratio required by covenants | 125.00% | ||||
New Credit Agreement [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Funded indebtedness to EBITDA ratio required by covenants | 100.00% | ||||
New Credit Agreement [Member] | Term Loan [Member] | |||||
Debt Instrument [Line Items] | |||||
Unamortized debt issuance cost | $ 200,000 | $ 200,000 | |||
Debt instrument maturity date | Mar. 7, 2019 | ||||
Indebtedness, term loans | 34,600,000 | ||||
Remaining borrowing capacity | $ 24,500,000 | ||||
New Credit Agreement [Member] | Term Loan [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Loan, principal amount | $ 60,000,000 |
Long-Term Debt - Aggregate Futu
Long-Term Debt - Aggregate Future Maturities of Long-Term Debt (Detail) $ in Thousands | Dec. 31, 2018USD ($) |
Debt Disclosure [Abstract] | |
2,019 | $ 1,775 |
2,020 | 1,775 |
2,021 | 1,775 |
2,022 | 1,775 |
2,023 | 1,775 |
Thereafter | 25,738 |
Total long-term debt | $ 34,613 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Details) - Term Loan [Member] - Interest Rate Swap [Member] - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Derivative [Line Items] | ||
Debt instrument maturity date | Sep. 7, 2025 | |
Description of variable rate basis | one-month LIBOR | |
Debt Instrument, Interest Rate, Stated Percentage | 2.54% | |
Derivative Instrument, notional value | $ 35.5 | |
Interest rate payment description | The objective of the interest rate swap is to reduce the variability in the forecasted interest payments of the Term Loans, which is based on a one-month LIBOR rate versus a fixed interest rate of 2.54% on a notional value of $35.5 million. Under the terms of the interest rate swap agreement, we will receive quarterly variable interest payments based on the LIBOR rate and will pay interest at a fixed rate. | |
Derivative instrument gain (loss) under fair value | $ 0.7 | $ (0.6) |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Additional Information (Detail) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Available-for-sale Securities [Member] | Certificates of Deposit [Member] | Maximum [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Financial instruments maturity period | 1 year | 1 year |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Schedule of Major Categories of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Commercial Paper [Member] | ||
Assets: | ||
Assets | $ 21,041 | $ 14,918 |
Certificates of Deposit [Member] | ||
Assets: | ||
Assets | 6,000 | 21,500 |
Level 2 [Member] | Commercial Paper [Member] | ||
Assets: | ||
Assets | 21,041 | 14,918 |
Level 2 [Member] | Certificates of Deposit [Member] | ||
Assets: | ||
Assets | 6,000 | 21,500 |
Interest Rate Swap [Member] | ||
Assets: | ||
Assets | 17 | |
Liabilities: | ||
Liabilities | 649 | |
Interest Rate Swap [Member] | Level 2 [Member] | ||
Assets: | ||
Assets | $ 17 | |
Liabilities: | ||
Liabilities | $ 649 |
Employee Savings Plan and Emp_2
Employee Savings Plan and Employee Stock Purchase Plan - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Contribution Plan Disclosure [Line Items] | |||
401(k) eligibility minimum service period | 90 days | ||
401(k) description of plan contributions | contribution of 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 | $ 5,300 | $ 4,100 | $ 3,500 |
Employee stock purchase plan overlapping offering period | 24 months | ||
Compensation expense related to ESPP | $ 36,411 | $ 36,047 | $ 20,796 |
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 | 59,041 | 76,728 | 110,658 |
Compensation expense related to ESPP | $ 1,300 | $ 800 | $ 600 |
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 | 18 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% |
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, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | [1] | Sep. 30, 2017 | [1] | Jun. 30, 2017 | [1] | Mar. 31, 2017 | [1] | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||||
Numerator: | ||||||||||||||||||
Net income | $ 31,414 | $ 28,769 | $ 35,722 | $ 41,160 | $ 48,866 | $ 20,910 | $ 20,016 | $ 33,694 | $ 137,065 | [1] | $ 123,486 | [1] | $ 70,421 | [1] | ||||
Less: income allocable to participating securities | (159) | (315) | (535) | |||||||||||||||
Income allocable to common shares | 136,906 | 123,171 | 69,886 | |||||||||||||||
Add back: undistributed earnings allocable to participating securities | 159 | 315 | 535 | |||||||||||||||
Less: undistributed earnings reallocated to participating securities | (156) | (310) | (535) | |||||||||||||||
Numerator for diluted earnings per share | $ 136,909 | $ 123,176 | $ 69,886 | |||||||||||||||
Denominator: | ||||||||||||||||||
Basic weighted average shares outstanding | 57,491,280 | 57,726,790 | 57,837,312 | 57,793,023 | 58,100,141 | 58,003,222 | 57,898,914 | 57,307,187 | 57,711,315 | 57,839,155 | [1] | 57,550,204 | [1] | |||||
Dilutive effect of unvested restricted stock | 871,171 | 950,864 | 1,417,895 | |||||||||||||||
Diluted weighted average shares outstanding | 58,238,231 | 58,545,061 | 58,720,785 | 58,738,732 | 58,850,271 | 58,873,502 | 58,816,442 | 58,525,980 | 58,582,486 | 58,790,019 | [1] | 58,968,099 | [1] | |||||
Earnings per share: | ||||||||||||||||||
Earnings per share, basic | $ 0.55 | $ 0.50 | $ 0.62 | $ 0.71 | $ 0.84 | $ 0.36 | $ 0.34 | $ 0.58 | $ 2.37 | $ 2.13 | [1] | $ 1.21 | [1] | |||||
Earnings per share, diluted | $ 0.54 | $ 0.49 | $ 0.61 | $ 0.70 | $ 0.83 | $ 0.35 | $ 0.34 | $ 0.57 | $ 2.34 | $ 2.10 | [1] | $ 1.19 | [1] | |||||
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Stockholders' Equity and Stoc_3
Stockholders' Equity and Stock-Based Compensation - Summary of Grant-Date Fair Values of Restricted Stock Granted and Related Assumptions (Detail) - Restricted Stock [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Risk-free interest rate | 2.54% | 1.85% | |
Risk-free interest rates, Minimum | 1.28% | ||
Risk-free interest rates, Maximum | 1.36% | ||
Estimated volatility | 25.00% | 23.00% | |
Estimated volatility, Minimum | 21.00% | ||
Estimated volatility, Maximum | 23.00% | ||
Expected life (in years) | 2 years | 2 years 3 months 19 days | 2 years 8 months 12 days |
Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Grant-date fair value of restricted stock | $ 81.14 | $ 46.78 | $ 23.15 |
Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Grant-date fair value of restricted stock | $ 122.83 | $ 60.67 | $ 49.34 |
Stockholders' Equity and Stoc_4
Stockholders' Equity and Stock-Based Compensation - Summary of Nonvested Restricted Stock Awards Activity (Detail) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Time-Based Shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Unvested shares of restricted stock outstanding at beginning of period | shares | 888,680 |
Restricted Stock Awards, Granted | shares | 337,050 |
Restricted Stock Awards, Vested | shares | (314,224) |
Restricted Stock Awards, Forfeited | shares | (105,037) |
Unvested shares of restricted stock outstanding at end of period | shares | 806,469 |
Unvested shares of restricted stock outstanding, Weighted Average Grant Date Fair Value, at beginning of period | $ / shares | $ 42.17 |
Granted, Weighted Average Grant Date Fair Value | $ / shares | 99.76 |
Vested, Weighted Average Grant Date Fair Value | $ / shares | 34.14 |
Forfeited, Weighted Average Grant Date Fair Value | $ / shares | 56.26 |
Unvested shares of restricted stock outstanding, Weighted Average Grant Date Fair Value, at end of period | $ / shares | $ 67.54 |
Market-Based Shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Restricted Stock Awards, Granted | shares | 284,118 |
Restricted Stock Awards, Vested | shares | (283,080) |
Restricted Stock Awards, Forfeited | shares | (1,038) |
Granted, Weighted Average Grant Date Fair Value | $ / shares | $ 82.84 |
Vested, Weighted Average Grant Date Fair Value | $ / shares | 82.84 |
Forfeited, Weighted Average Grant Date Fair Value | $ / shares | $ 82.64 |
Stockholders' Equity and Stoc_5
Stockholders' Equity and Stock-Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Compensation expense related to ESPP | $ 36,411 | $ 36,047 | $ 20,796 |
Software and Capitalized Software Costs [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Capitalized compensation cost | 3,700 | 3,300 | 1,800 |
Restricted Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Compensation expense related to ESPP | 36,400 | $ 36,000 | $ 20,800 |
Total unrecognized compensation cost related to unvested restricted stock | $ 41,400 | ||
Unrecognized compensation expected to be recognized | 1 year 9 months 18 days | ||
Restricted Stock [Member] | Non Executive Employees [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | first three anniversaries | ||
Restricted Stock [Member] | Executive Officers [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | in three equal annual tranches beginning on a specified initial vesting date and thereafter on the first and second anniversaries | ||
Restricted Stock [Member] | Market-Based Shares [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Number of shares vested | 284,118 | ||
Restricted Stock [Member] | vest 50% on the first date that the Company’s total enterprise value ("TEV") (calculated as defined in the applicable restricted stock award agreement) equaled or exceeded $5.9 billion [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Market-based vesting percentage, restricted shares | 50.00% | ||
Total enterprise value | $ 5,900,000 | ||
Restricted Stock [Member] | Time-Based Shares [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Number of shares vested | 337,050 | ||
Restricted Stock [Member] | Vest 50% on the first date that the Company’s TEV equaled or exceeded $6.2 billion [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Market-based vesting percentage, restricted shares | 50.00% | ||
Total enterprise value | $ 6,200,000 | ||
Restricted Stock [Member] | Tranche One [Member] | Non Executive Employees [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Market-based vesting percentage, restricted shares | 25.00% | ||
Restricted Stock [Member] | Tranche Two [Member] | Non Executive Employees [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Market-based vesting percentage, restricted shares | 25.00% | ||
Restricted Stock [Member] | LTIP [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Restricted shares issued | 621,168 |
Stockholders' Equity and Stoc_6
Stockholders' Equity and Stock-Based Compensation - Summary of Market-Based Shares Vesting Activity (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Compensation Cost Recognized Upon Vesting | $ 36,411 | $ 36,047 | $ 20,796 |
Market-Based Shares [Member] | Market-based [Member] | Vest Date March 14, 2018 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Date Vested | Mar. 14, 2018 | ||
Number of Shares Vested | 141,599 | ||
Compensation Cost Recognized Upon Vesting | $ 9,700 | ||
Shares withheld to satisfy tax withholding obligations | 54,000 | ||
Market-Based Shares [Member] | Market-based [Member] | Vest Date March 23, 2018 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Date Vested | Mar. 23, 2018 | ||
Number of Shares Vested | 141,481 | ||
Compensation Cost Recognized Upon Vesting | $ 10,100 | ||
Shares withheld to satisfy tax withholding obligations | 54,909 |
Stockholders' Equity and Stoc_7
Stockholders' Equity and Stock-Based Compensation - Summary of Market-Based Shares Vesting Activity (Parenthetical) (Detail) - Market-Based Shares [Member] - Market-based [Member] $ in Billions | Dec. 31, 2018USD ($) |
Vest Date March 14, 2018 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
TEV | $ 5.9 |
Vest Date March 23, 2018 [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
TEV | $ 6.2 |
Stockholders' Equity and Stoc_8
Stockholders' Equity and Stock-based Compensation - Non-cash Stock-based Compensation Resulting From Restricted Stock Awards (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Non-cash stock-based compensation expense | $ 36,411 | $ 36,047 | $ 20,796 |
Operating Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Non-cash stock-based compensation expense | 4,041 | 3,950 | 2,217 |
Sales and Marketing Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Non-cash stock-based compensation expense | 7,510 | 5,023 | 3,028 |
Research and Development Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Non-cash stock-based compensation expense | 3,013 | 1,912 | 836 |
General and Administrative Expense [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Non-cash stock-based compensation expense | $ 21,847 | $ 25,162 | $ 14,715 |
Related-Party Transactions - Ad
Related-Party Transactions - Additional Information (Detail) - 417 Oakbend, LP [Member] $ in Millions | 4 Months Ended |
Apr. 30, 2016USD ($) | |
Related Party Transaction [Line Items] | |
Payments for rent | $ 0.1 |
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, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Other Commitments [Line Items] | |||
Liability for deferred rent | $ 1.4 | $ 1.3 | |
Operating lease rent expense | $ 7.6 | $ 6.1 | $ 5.6 |
Minimum [Member] | |||
Other Commitments [Line Items] | |||
Operating lease expiration year | 2,019 | ||
Maximum [Member] | |||
Other Commitments [Line Items] | |||
Operating lease expiration year | 2,024 |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Future Annual Minimum Lease Payments (Detail) $ in Thousands | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2,019 | $ 8,315 |
2,020 | 6,900 |
2,021 | 5,224 |
2,022 | 4,478 |
2,023 | 2,839 |
Thereafter | 502 |
Total minimum lease payments | $ 28,258 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Provision for current income taxes | |||||
Federal | $ 12,414 | $ 10,136 | $ 12,207 | ||
State | 4,155 | 1,791 | 3,044 | ||
Total provision for current income taxes | 16,569 | 11,927 | 15,251 | ||
Provision (benefit) for deferred income taxes, net | |||||
Federal | 14,365 | (3,865) | 12,708 | ||
State | 6,712 | (3,816) | 2,632 | ||
Total benefit for deferred income taxes, net | 21,077 | (7,681) | 15,340 | ||
Total provision for income taxes | $ 37,646 | $ 4,246 | [1] | $ 30,591 | [1] |
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Statutory Federal Tax Rate to Effective Income Tax Rate (Detail) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Federal statutory tax rate | 21.00% | 35.00% | 35.00% |
State income taxes, net of Federal income tax benefit | 6.00% | 4.00% | 4.00% |
Nondeductible expenses | 1.00% | 0.00% | 0.00% |
Research credit, Federal benefit | (2.00%) | (2.00%) | (1.00%) |
Section 199 - Qualified production activities | (0.00%) | (1.00%) | (1.00%) |
Stock-based compensation | (4.00%) | (13.00%) | (7.00%) |
Remeasurement of deferred tax liabilities | 0.00% | (20.00%) | 0.00% |
Effective income tax rate | 22.00% | 3.00% | 30.00% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax [Line Items] | |||
Effective income tax rate | 22.00% | 3.00% | 30.00% |
Unrecognized tax benefits | $ 0 | $ 0 | |
State Income Tax [Member] | |||
Income Tax [Line Items] | |||
Net operating loss carryforwards for state income tax | $ 900,000 |
Income Taxes - Net Deferred Tax
Income Taxes - Net Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | |
Deferred income tax assets (liabilities): | |||
Stock-based compensation | $ 1,529 | $ 945 | |
Investment in Paycom Payroll Holdings, LLC | (73,020) | (51,821) | |
Net operating losses | 935 | 1,677 | |
Federal tax credits | 350 | 70 | |
Noncurrent deferred income tax liabilities, net | $ (70,206) | $ (49,129) | [1] |
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Selected Quarterly Financial _3
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, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | [1] | Sep. 30, 2017 | [1] | Jun. 30, 2017 | [1] | Mar. 31, 2017 | [1] | Dec. 31, 2018 | Dec. 31, 2017 | [1] | Dec. 31, 2016 | [1] | ||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||||
Revenues | $ 150,332 | $ 133,288 | $ 128,800 | $ 153,916 | $ 114,025 | $ 101,287 | $ 98,227 | $ 119,508 | ||||||||||
Operating income | 43,413 | 36,245 | 43,037 | 51,020 | 36,401 | 22,007 | 18,792 | 52,510 | $ 173,715 | $ 129,710 | $ 101,740 | |||||||
Net income | $ 31,414 | $ 28,769 | $ 35,722 | $ 41,160 | $ 48,866 | $ 20,910 | $ 20,016 | $ 33,694 | $ 137,065 | [1] | $ 123,486 | $ 70,421 | ||||||
Earnings per share, basic | $ 0.55 | $ 0.50 | $ 0.62 | $ 0.71 | $ 0.84 | $ 0.36 | $ 0.34 | $ 0.58 | $ 2.37 | $ 2.13 | $ 1.21 | |||||||
Earnings per share, diluted | $ 0.54 | $ 0.49 | $ 0.61 | $ 0.70 | $ 0.83 | $ 0.35 | $ 0.34 | $ 0.57 | $ 2.34 | $ 2.10 | $ 1.19 | |||||||
Weighted average shares outstanding: | ||||||||||||||||||
Basic | 57,491,280 | 57,726,790 | 57,837,312 | 57,793,023 | 58,100,141 | 58,003,222 | 57,898,914 | 57,307,187 | 57,711,315 | 57,839,155 | 57,550,204 | |||||||
Diluted | 58,238,231 | 58,545,061 | 58,720,785 | 58,738,732 | 58,850,271 | 58,873,502 | 58,816,442 | 58,525,980 | 58,582,486 | 58,790,019 | 58,968,099 | |||||||
[1] | Prior year amounts have been recast to reflect the adoption of ASU 2014-09. See Note 2 for description of adjustments. |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) - USD ($) $ in Thousands | Feb. 13, 2019 | Jan. 17, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Subsequent Event [Line Items] | |||||
Compensation cost recognized upon vesting | $ 36,411 | $ 36,047 | $ 20,796 | ||
Restricted Stock [Member] | |||||
Subsequent Event [Line Items] | |||||
Compensation cost recognized upon vesting | $ 36,400 | $ 36,000 | $ 20,800 | ||
Restricted Stock [Member] | Non Executive Employees [Member] | |||||
Subsequent Event [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | first three anniversaries | ||||
Restricted Stock [Member] | Executive Officers [Member] | |||||
Subsequent Event [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | in three equal annual tranches beginning on a specified initial vesting date and thereafter on the first and second anniversaries | ||||
Restricted Stock [Member] | Market-Based Shares [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of shares vested | 284,118 | ||||
Restricted Stock [Member] | Time-Based Shares [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of shares vested | 337,050 | ||||
Restricted Stock [Member] | Tranche One [Member] | Non Executive Employees [Member] | |||||
Subsequent Event [Line Items] | |||||
Market-based vesting percentage, restricted shares | 25.00% | ||||
Restricted Stock [Member] | Tranche Two [Member] | Non Executive Employees [Member] | |||||
Subsequent Event [Line Items] | |||||
Market-based vesting percentage, restricted shares | 25.00% | ||||
Restricted Stock [Member] | LTIP [Member] | |||||
Subsequent Event [Line Items] | |||||
Restricted shares issued | 621,168 | ||||
Restricted Stock [Member] | Subsequent Event [Member] | Non Executive Employees [Member] | |||||
Subsequent Event [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | first three anniversaries | ||||
Restricted Stock [Member] | Subsequent Event [Member] | Executive Officers [Member] | |||||
Subsequent Event [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights | three equal annual tranches beginning on a specified initial vesting date and thereafter on the first and second anniversaries | ||||
Restricted Stock [Member] | Subsequent Event [Member] | Market-Based Shares [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of shares vested | 280,960 | ||||
Restricted Stock [Member] | Subsequent Event [Member] | Time-Based Shares [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of shares vested | 231,109 | ||||
Restricted Stock [Member] | Subsequent Event [Member] | Vest 50% on the first date that the Company’s TEV (calculated as defined in the applicable restricted stock award agreement) equals or exceeds $8.65 billion [Member] | |||||
Subsequent Event [Line Items] | |||||
Market-based vesting percentage, restricted shares | 50.00% | ||||
Total enterprise value | $ 8,650,000 | ||||
Restricted Stock [Member] | Subsequent Event [Member] | Vest 50% on the first date that the Company’s TEV equals or exceeds $9.35 billion [Member] | |||||
Subsequent Event [Line Items] | |||||
Market-based vesting percentage, restricted shares | 50.00% | ||||
Total enterprise value | $ 9,350,000 | ||||
Restricted Stock [Member] | Subsequent Event [Member] | Tranche One [Member] | Non Executive Employees [Member] | |||||
Subsequent Event [Line Items] | |||||
Market-based vesting percentage, restricted shares | 25.00% | ||||
Restricted Stock [Member] | Subsequent Event [Member] | Tranche Two [Member] | Non Executive Employees [Member] | |||||
Subsequent Event [Line Items] | |||||
Market-based vesting percentage, restricted shares | 25.00% | ||||
Restricted Stock [Member] | Subsequent Event [Member] | LTIP [Member] | |||||
Subsequent Event [Line Items] | |||||
Restricted shares issued | 512,069 | ||||
Restricted Stock [Member] | Subsequent Event [Member] | LTIP [Member] | Market-Based Shares [Member] | |||||
Subsequent Event [Line Items] | |||||
Number of shares vested | 140,218 | ||||
Compensation cost recognized upon vesting | $ 14,900 |