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What we think about Paycom Software (PAYC)

Paycom in Three Words: Human Capital Management

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Background

Paycom Software is a human capital management (HCM) company that provides a range of critical functions for businesses, from hiring to retirement. Founded in 1998 by Chad Richison, who has served as CEO since its inception, the company went public in 2014. Paycom’s software is designed to be easy to use, making it simple for employees to adopt and manage their own human capital management activities through the cloud. This self-management approach helps to reduce the administrative burden on employers and can increase employee productivity. The company’s self-service solutions, including payroll, have received positive feedback from customers.

Paycom makes money by charging its clients fixed amounts per billing period, as well as a fee per employee or transaction processed. The billing period varies based on each client’s payroll schedule, which may be weekly, bi-weekly, semi-monthly, or monthly. As a payroll processor, Paycom also holds clients’ funds, on which it can earn interest. This adds to the company’s bottom line in the current higher interest rate environment.

Paycom targets businesses with 50 to 10,000 employees and focuses on the US market. The company has more than 34,000 clients and accounts for approximately 5% of the total addressable HCM market.

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Recent Company Updates:

February 14, 2025: Paycom reported full year 2024 results that demonstrated solid and profitable growth. 11% growth in revenue resulted in a 47% increase in GAAP net income and a 52% increase in earnings per share. Join 7investing to get access to this section