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    PAYC
    Earnings call· Mar 2026(Q1 FY26)

    Paycom Software Q1 FY26 earnings call PAYC

    May 6, 2026 Source

    Executive summary

    Paycom Q1 FY26 — Strong Revenue, Share Buyback, and Automation Progress

    Paycom delivered solid Q1 FY26 results, driven by strong recurring revenue and operational efficiencies from automation. The company reaffirmed its full-year guidance, indicating a conservative outlook despite the strong start. Management highlighted increased client engagement and the strategic value of its automation solutions, including AI, while also executing a significant share repurchase program.

    Highlights

    5

    • Total revenues reached $572 million, marking an 8% increase over the prior year period.

    • Recurring and other revenue grew 9% year-over-year to $544 million.

    • Adjusted EBITDA expanded by 50 basis points year-over-year to 48.2%, totaling $275 million.

    • The company repurchased approximately 8.4 million shares for $1.06 billion in Q1 FY26.

    • A new $2 billion share buyback authorization was approved by the board.

    Concerns

    1

    • Full-year revenue and adjusted EBITDA guidance ranges were reaffirmed despite a strong Q1 beat, implying a slowdown in growth for the remainder of the year.

    Guidance & targets

    6
    CategoryTargetConfidence
    Total revenues
    $2.175 billion to $2.195 billion
    high materiality
    High
    Total revenues growth
    approximately 6.5% year-over-year growth at the midpoint
    high materiality
    High
    Recurring and other revenue growth
    up 7% to 8% year-over-year
    medium materiality
    High
    Adjusted EBITDA
    $950 million to $970 million
    high materiality
    High
    Adjusted EBITDA margin
    44% at the midpoint
    high materiality
    High
    Interest on funds held for clients
    $103 million
    medium materiality
    High

    Operational metrics

    10
    Adjusted EBITDA
    $275M
    Q1 FY26

    Resulted from revenue strength and operational efficiencies from automation.

    Adjusted EBITDA margin
    48.2%50 bps year-over-year expansion
    Q1 FY26

    Achieved without compromising sales and marketing effectiveness, service, or product innovation.

    Non-GAAP net income
    $161M
    Q1 FY26

    Based on 51 million shares.

    Shares repurchased
    8.4Mapproximately 15% of shares outstanding as of end of 2025
    Q1 FY26

    Part of the company's capital allocation strategy.

    Cash dividends paid
    $18M
    Q1 FY26

    Paid in cash dividends during the quarter.

    IWant usage growth
    33%
    since end of Q4 FY25

    IWant is an AI solution accelerating speed to value for clients, becoming a predominant interface.

    Capital expenditure as % of revenue
    6%
    Q1 FY26

    Analyst noted this level, management indicated it might not be a reasonable expectation for the full year due to data center moratoriums and expansion opportunities.

    Beti ROI
    90%
    N/A

    Finding by Forrester.

    GONE ROI
    800%
    N/A

    Finding by Forrester.

    Net Promoter Score
    continuing to increase
    current

    Impacted positively by focus on client ROI and world-class service.

    Industry KPIs

    4
    MetricValueDetails
    Retention rateincreased
    Revenue model mixdifferent pricing structures
    Client funds balances yield$3.1B (average daily balance), $103M (interest revenue)USD
    New business bookings growthaccording to budget

    Product announcements

    4
    ProductTypeDetails
    IWantupdate
    Betimilestone
    GONEmilestone
    Expense Management Moduleupdate

    Capital programs

    2
    Share Buyback Authorizationapproved$2 billion
    Start: May 4, 2026

    Benefit: Replaced prior authorization

    Approved by the board on May 4, 2026, to replace the prior authorization. Management views the stock as undervalued, making buybacks opportunistic.

    Revolving Credit Facilityreplaced$2.125 billion
    Spent to date: $675 million currently drawn down
    Start: April 2026

    Replaced the previous revolving credit facility with a new 5-year facility in April. $675 million is currently drawn down.

    Risks & headwinds

    3
    Market perception and stock valuationcurrent

    Stock doesn't trade off company performance, but on 'AI prophecy' and 'sky's falling narrative'.

    Mitigation: Opportunistic share repurchases, belief in long-term value for investors.

    Data center moratoriums and CapEx impactFY26

    Impact on CapEx for the year is uncertain.

    Mitigation: Monitoring opportunities to expand in power and purchase of items, no specific guidance given yet.

    Sales force training impact on book salesQ1 FY26

    Put 'a little air in the line' for Q1 book sales.

    Mitigation: Expect greater opportunities for book sales inflection throughout the year as training concludes and reps return to the field.

    What to watch in Q2 FY26

    4

    Book sales inflection

    throughout the year
    Currentaccording to budget for Q1, 'a little air in the line' from training
    Targetgreater opportunities for book sales to have some inflection

    Why it matters

    Indicates the effectiveness of recent sales force changes and will be a key driver for future revenue growth.

    I will say that book sales came in, according to budget and what our expectation was for first quarter. I also had kind of mentioned that we had pulled our sales group out of the field for a 3-month period of time. Not full 3 months, but you'd have to come for a week and then go back and then come back for a week. You know, that put a little air in the line, and we would expect as we move throughout the year to have greater opportunities for book sales to have some inflection there.

    Q&A highlights

    6

    What factors, such as new bookings, seller headcount/productivity, or employment growth, contributed to the stronger-than-expected recurring revenue in Q1?

    Q1 performance was in line with internal expectations, with the forms filing business contributing to a higher margin profile. Sales department changes did not significantly impact Q1 starts.

    “I would say it came in about what we expected for our expectations. You know, when deal starts matter within a quarter, and you know, we had a successful quarter in the first quarter. Also first quarter, to keep in mind, it is the quarter where we have our forms filing business. That also can contribute to a higher margin profile in the first quarter.”

    asked by Jordan Ross Boretz · answered by Chad Richison

    2 min read6 chapters

    Detailed Narrative

    01

    Automation and Client ROI

    Paycom's full solution automation strategy, including products like Beti, GONE, and IWant, is driving significant client ROI. Beti has been shown to reduce payroll processing labor by 90%, while GONE delivers an ROI of over 800%. The AI solution, IWant, is accelerating speed to value for clients, with its usage increasing by 33% since the end of Q4 FY25, becoming a predominant interface for many users.

    02

    Market Opportunity and Industry Recognition

    The company currently serves approximately 5% of the addressable market, indicating a significant long-term growth opportunity. Paycom has received multiple industry accolades, including being named the best HR and payroll software provider by G2 in Spring 2026 and recognized as a 2026 Platinum Employer on the 'Where You Work Matters' list. It was also the only company in its industry to earn a 5-star rating on USA Today's Most Trusted Brands in 2026.

    03

    Capital Allocation Strategy and Share Repurchases

    Paycom executed a substantial share repurchase program in Q1 FY26, buying back approximately 8.4 million shares for $1.06 billion, representing about 15% of shares outstanding at the end of 2025. The board subsequently approved a new $2 billion buyback authorization. Management views the company's stock as undervalued, presenting an opportunistic scenario for repurchases that benefits long-term investors.

    04

    Sales Force and Go-to-Market Evolution

    Significant changes were implemented in the sales organization starting in late October/November of the previous year. The focus is on effectively selling automation and ensuring clients achieve the promised ROI from the outset. These changes, coupled with enhanced training, are leading to new sales representatives ramping up faster than those in the past 6-7 years.

    05

    Internal Efficiencies and AI Adoption

    Paycom is leveraging its automation strategy, including AI, across all internal departments and functions to boost efficiencies. While specific internal examples are not disclosed for competitive reasons, the company emphasizes that there is no area of its business untouched by this automation focus, which is a continuous discipline for future improvements.

    06

    Pricing Model and Client Value

    The company considers its pricing model proprietary but states that the overall value proposition to clients has not changed meaningfully. Paycom utilizes different pricing structures tailored to individual clients based on factors like hiring patterns and turnover, aiming to provide the most helpful and value-driven approach.

    AI-generated summary of the company’s earnings call. Not investment advice.