Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Paycom Software Inc., consolidated cash flow statement

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net income	281,389)	195,960)	143,453)	180,576)	137,065)
Depreciation and amortization	92,699)	67,222)	53,373)	42,211)	29,657)
Accretion of discount on available-for-sale securities	(1,020)	(452)	(1,563)	(940)	(1,112)
Non-cash marketing expense	1,734)	1,051)	—)	—)	—)
(Gain) loss on disposition of property and equipment	(150)	146)	—)	—)	—)
Amortization of debt issuance costs	847)	36)	36)	35)	32)
Stock-based compensation expense	94,898)	97,506)	90,108)	47,268)	36,576)
Cash paid for derivative settlement	205)	(741)	(613)	(81)	(188)
(Gain) loss on derivative	(1,559)	(662)	1,993)	1,456)	(479)
Deferred income taxes, net	(3,210)	32,906)	21,381)	21,011)	21,077)
Other	(206)	—)	—)	—)	—)
Accounts receivable	(13,353)	(360)	168)	(5,884)	(1,838)
Prepaid expenses	(6,497)	(5,875)	(4,293)	(5,903)	(2,676)
Inventory	(224)	481)	(41)	(403)	(306)
Other assets	(13,907)	(7,862)	(1,720)	(3,555)	(762)
Deferred contract costs	(122,440)	(103,356)	(89,776)	(76,204)	(60,730)
Accounts payable	11,676)	(660)	1,529)	(221)	1,079)
Income taxes, net	10,830)	(5,966)	(6,427)	(58)	3,085)
Accrued commissions and bonuses	6,082)	8,654)	1,360)	1,672)	1,086)
Accrued payroll and vacation	10,764)	9,730)	9,659)	4,129)	3,726)
Deferred revenue	15,990)	14,600)	10,582)	11,593)	13,027)
Accrued expenses and other current liabilities	555)	17,004)	(2,002)	7,561)	6,498)
Changes in operating assets and liabilities	(100,524)	(73,610)	(80,961)	(67,273)	(37,811)
Adjustments to reconcile net income to net cash provided by operating activities	83,714)	123,402)	83,754)	43,687)	47,752)
Net cash provided by operating activities	365,103)	319,362)	227,207)	224,263)	184,817)
Purchases of investments from funds held for clients	(268,718)	(398,819)	(332,756)	(195,811)	(145,011)
Proceeds from investments from funds held for clients	382,230)	267,341)	308,981)	69,200)	155,500)
Net change in funds held for clients	—)	—)	—)	—)	112,037)
Purchases of intangible assets	(4,120)	(5,500)	—)	—)	—)
Purchases of property and equipment	(132,678)	(120,692)	(94,102)	(92,934)	(59,906)
Net cash (used in) provided by investing activities	(23,286)	(257,670)	(117,877)	(219,545)	62,620)
Proceeds from the issuance of debt	29,000)	—)	—)	—)	—)
Repurchases of common stock	(94,652)	—)	(52,040)	—)	(105,188)
Withholding taxes paid related to net share settlements	(5,171)	(65,580)	(62,811)	(42,528)	(20,248)
Payments on long-term debt	(29,287)	(1,775)	(1,775)	(1,775)	(888)
Net change in client funds obligation	361,133)	233,079)	(49,283)	694,991)	(121,414)
Payment of debt issuance costs	(6,436)	—)	—)	(16)	(58)
Net cash provided by (used in) financing activities	254,587)	165,724)	(165,909)	650,672)	(247,796)
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	596,404)	227,416)	(56,579)	655,390)	(359)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period	1,812,691)	1,585,275)	1,641,854)	986,464)	46,077)
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period	2,409,095)	1,812,691)	1,585,275)	1,641,854)	45,718)

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).

Profitability and Income Trends: Net income demonstrates an overall upward trajectory from 2018 to 2022, increasing from approximately $137 million to over $281 million. There was a notable dip in 2020, followed by recovery and significant growth in subsequent years, highlighting strong profitability improvement.
Depreciation, Amortization, and Non-Cash Expenses: Depreciation and amortization expenses steadily increased each year, nearly tripling over the five-year period, indicating growing capital asset investments or amortization of intangible assets. Stock-based compensation expenses also rose markedly from about $37 million to $95 million, reflecting increased employee equity incentives with a pronounced jump in 2020. Amortization of debt issuance costs remained relatively stable until a sharp increase in 2022.
Operating Assets and Liabilities: Changes in operating assets and liabilities show increasingly negative values, especially in 2022, suggesting more cash was tied up in working capital components over time. Deferred contract costs consistently grew negatively, indicating rising costs deferred over contract periods. Deferred revenue increased steadily, reflecting growth in billings ahead of revenue recognition. Accounts receivable and prepaid expenses showed irregular fluctuations but ended with significant negative values in 2022, possibly pointing to a mix of collection and prepayment timing effects. Accounts payable and accrued liabilities showed variability, with accrued payroll, commissions, and bonuses generally increasing, consistent with employee growth or compensation increases.
Cash Flows from Operating Activities: Net cash provided by operating activities showed strong growth over the period, rising from around $185 million in 2018 to $365 million in 2022, confirming robust cash generation from core business operations consistent with profitability trends.
Investing Activities: Cash flows used in investing activities were negative in most years except 2018, with significant purchases of property and equipment and investments. The reduction in purchases in 2022 coincided with a smaller net cash outflow compared to previous years. The purchases and proceeds related to funds held for clients fluctuated, with large amounts involved, indicating active management of client funds. Investment in intangible assets appeared only in later years and remained limited compared to physical assets.
Financing Activities: Financing cash flows were volatile, with a large inflow in 2019 followed by negative and then positive values in subsequent years. Significant stock repurchases were evident in 2018, 2020, and 2022, reflecting capital return strategies. Payments on long-term debt increased substantially in 2022, as did proceeds from debt issuance in the same year, resulting in net positive financing cash flow. Withholding taxes related to share settlements were consistently sizable cash outflows throughout the period.
Cash Position: The company’s cash balance showed substantial growth from around $46 million at the end of 2018 to nearly $2.4 billion by the end of 2022, supported by strong operating cash flows and occasional financing inflows. The increase in cash, cash equivalents, and restricted cash aligns with improved liquidity over time.
Other Financial Items and Adjustments: Adjustments to reconcile net income to net cash from operating activities generally increased, signifying growing non-cash charges or timing differences affecting reported earnings. Income taxes exhibited volatility, with negative amounts in 2020 and 2021 reversing to a positive figure in 2022. Gains and losses on derivatives and disposition of property and equipment were minor and inconsistent, indicating limited impact on overall results.

Download chart

Paycom Software Inc. (NYSE:PAYC)

Cash Flow Statement