Name: Paycom Software Inc. (NYSE:PAYC) | Common-Size Income Statement
Creator: Stock Analysis on Net

Common-Size Income Statement

Paycom Software Inc., common-size consolidated income statement

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Recurring	98.30%	98.22%	98.15%	98.20%	98.40%
Implementation and other	1.70%	1.78%	1.85%	1.80%	1.60%
Revenues	100.00%	100.00%	100.00%	100.00%	100.00%
Operating expenses	-12.35%	-12.36%	-11.62%	-12.11%	-13.46%
Depreciation and amortization	-3.12%	-2.98%	-3.06%	-2.77%	-2.57%
Cost of revenues	-15.47%	-15.34%	-14.68%	-14.88%	-16.03%
Gross profit	84.53%	84.66%	85.32%	85.12%	83.97%
Sales and marketing	-25.20%	-26.15%	-28.01%	-24.30%	-25.41%
Research and development	-10.79%	-11.22%	-10.73%	-9.91%	-8.17%
General and administrative	-17.39%	-19.88%	-21.18%	-17.29%	-17.06%
Depreciation and amortization	-3.62%	-3.39%	-3.28%	-2.96%	-2.67%
Administrative expenses	-56.99%	-60.64%	-63.20%	-54.46%	-53.30%
Operating income	27.54%	24.02%	22.12%	30.67%	30.67%
Interest expense	-0.18%	0.00%	0.00%	-0.13%	-0.14%
Other income (expense), net	0.98%	0.23%	-0.02%	0.11%	0.31%
Income before income taxes	28.33%	24.25%	22.10%	30.65%	30.85%
Provision for income taxes	-7.87%	-5.68%	-5.05%	-6.17%	-6.65%
Net income	20.46%	18.57%	17.05%	24.48%	24.20%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

The financial performance between 2018 and 2022 is characterized by a highly stable revenue model and consistently strong gross margins, although operating efficiency experienced a notable contraction in 2020 followed by a steady recovery.

Revenue Composition: Recurring revenue consistently represents the vast majority of total revenues, maintaining a narrow range between 98.15% and 98.40%. Implementation and other revenues remain a minimal component of the overall mix, fluctuating slightly between 1.60% and 1.85% over the five-year period.
Gross Profitability: Gross profit margins remained robust and stable, peaking at 85.32% in 2020. The cost of revenues showed minimal variance, ranging from 14.68% to 16.03%, indicating a highly scalable cost structure that effectively tracks with revenue growth.
Operating Expense Analysis: Administrative expenses exhibited significant volatility, rising from 53.30% of revenues in 2018 to a peak of 63.20% in 2020, before moderating to 56.99% in 2022. This trend was driven by a spike in general and administrative costs, which reached 21.18% in 2020, and sales and marketing expenses, which peaked at 28.01% in the same year. Concurrently, research and development spending showed a gradual increase from 8.17% in 2018 to 10.79% in 2022, reflecting sustained investment in product enhancement.
Operating and Net Profitability: Operating income margins experienced a sharp decline from 30.67% in 2019 to a period low of 22.12% in 2020, directly correlating with the increase in operating expenditures. A recovery trend followed, with the margin rising to 27.54% by 2022. Net income margins mirrored this pattern, falling from a peak of 24.48% in 2019 to 17.05% in 2020, eventually rebounding to 20.46% in 2022.
Other Income and Taxation: Interest expenses remained negligible, consistently staying below 0.20% of revenues. The provision for income taxes fluctuated between 5.05% and 7.87%, with the highest tax burden relative to revenue occurring in 2022.

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