Paycom Software Inc. (NYSE:PAYC)

The financial data reflects significant growth and evolving cost structures over the five-year period ending December 31, 2022.

Revenue and Recurring Revenue Trends

Revenues increased substantially from approximately $566 million in 2018 to about $1.38 billion in 2022, representing strong top-line growth. Recurring revenues, a significant component of total revenues, also expanded from around $557 million to nearly $1.35 billion, indicating a growing and stable revenue base. Implementation and other revenues showed steady but more moderate increases compared to recurring revenues.

Cost and Expense Patterns

Operating expenses increased continuously, from about $76 million in 2018 to nearly $170 million in 2022, reflecting investments in operational capacity. Depreciation and amortization expenses likewise rose significantly, more than doubling from approximately $14.5 million to $42.9 million, indicative of increased capital expenditures or asset base growth.

Cost of revenues increased in tandem with revenue growth, more than doubling from roughly $90.8 million to $212.7 million over the period. Sales and marketing expenses exhibited a strong upward trend, rising from $143.9 million to $346.6 million, consistent with efforts to support revenue growth and market expansion.

Research and development expenses also increased steadily, from about $46.2 million to $148.3 million, signaling substantial investment in innovation and product development. General and administrative expenses expanded from $96.6 million to $239.1 million, reflecting scaling support functions in line with business growth.

Administrative expenses, which include sales and marketing, research and development, and general and administrative costs, rose dramatically from $301.9 million to $783.8 million, showing significant overall operational expenditure growth.

Profitability Metrics

Gross profit grew significantly from approximately $476 million to over $1.16 billion, highlighting strong margin retention despite increasing cost of revenues. Operating income fluctuated but generally trended upward, rising from about $174 million to nearly $379 million. This suggests the company improved operating efficiency or scaled profitably as revenues expanded.

Interest expense was relatively low throughout most years but increased noticeably to $2.5 million in 2022, potentially indicating additional financing or changes in debt structure. Other income (expense), net, showed some volatility but improved notably to $13.4 million in 2022, contributing positively to pre-tax income.

Income before income taxes grew substantially, from around $175 million to nearly $390 million, consistent with rising operating income and other income components. Provision for income taxes increased proportionally, suggesting a stable effective tax burden relative to income.

Net income followed a generally upward trend, increasing from approximately $137 million in 2018 to $281 million in 2022, underscoring enhanced profitability and operational success over the period.