Paycom Software Set to Release Q1 2025 Earnings Results
Paycom Software, Inc. (PAYC) will report its first-quarter 2025 results after the market closes on May 7.
Expected First-Quarter Earnings and Revenue
The Zacks Consensus Estimate predicts earnings at $2.60 per share, marking a modest 0.4% increase year-over-year. However, this estimate has faced a downward revision of 3 cents in the last 60 days.
For revenues, the consensus estimate stands at $525.6 million, reflecting an approximate 5.2% increase from last year’s sales of $499.9 million.
Past Performance
Paycom has outperformed the Zacks Consensus Estimate in the previous four quarters, with an average earnings surprise of 5.2%.
Paycom Software Price and EPS Surprise
Paycom Software, Inc. price-eps-surprise | Paycom Software, Inc. Quote
Influential Factors for Q1 Results
For the first quarter, Paycom’s results are expected to reflect robust growth in recurring revenues. This growth is attributed to new client acquisitions and the integration of artificial intelligence (AI) in its products. Ongoing investments in automation and international expansion could help consolidate its competitive position.
The adoption of AI-driven tools is enhancing Paycom’s payroll and HR functionalities, providing businesses with a more efficient option for streamlining operations. Projections for recurring revenues stand at $500.7 million, marking a 7.5% year-over-year increase due to the effectiveness of its subscription model.
Improvements in the Beti and GONE solutions have further bolstered client adoption. Beti allows employees to manage payroll autonomously, thus relieving administrative burdens, while GONE streamlines time-off requests. This focus on user experience likely boosts client engagement and retention.
Despite these advancements, some challenges could impact growth. Across various industries, layoffs and hiring slowdowns may have reduced transaction volumes and demand for payroll services. Additionally, geopolitical tensions and economic uncertainties could lead to delayed investments in HR software by prospective clients.
Earnings Whispers for PAYC Stock
Currently, our model does not indicate a definitive earnings beat for Paycom. A favorable combination of positive earnings ESP (Earnings Surprise Prediction) alongside a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold) typically improves chances for an earnings surprise. However, in this case, that is not true.
Paycom holds a Zacks Rank of #1 but has an earnings ESP of 0.00%. Investors might want to explore stocks with favorable combinations for potential earnings beats.
Stocks with Favorable Earnings Combinations
We identify BILL Holdings (BILL), Fortinet (FTNT), and Advanced Micro Devices (AMD) as stocks with strong potential for earnings beats in their upcoming reports.
BILL Holdings, scheduled to report third-quarter fiscal 2025 results on May 8, has an earnings ESP of +0.30% and a Zacks Rank #3, with an estimated earnings of 37 cents per share, indicating a year-over-year decline of 38.3%. Its shares have dropped 28% over the past year.
Fortinet’s first-quarter results are set to be released on May 7, with a Zacks Rank #3 and an earnings ESP of +3.77%. The consensus estimate for first-quarter earnings stands at 53 cents per share, which remains unchanged and suggests a year-over-year growth of 23.3%. Fortinet’s shares have risen by 80.5% over the past year.
Advanced Micro Devices will also release its first-quarter results on May 6, holding a Zacks Rank #3 and an earnings ESP of +0.74%. Its estimated earnings of 93 cents per share are unchanged and indicate a 50% increase from the prior year’s figure, although AMD shares have fallen 36.6% over the last year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
