Paycom Software (PAYC) investor relations material

Executive summary

• Q2 2026 revenue reached $531.2 million, up 9.8–10% year-over-year, driven by broad-based demand, automation, and new product launches including Career and Succession Planning, Asset Management, and Project Arc.

• GAAP net income was $107.4 million ($2.34 per diluted share), up 20% year-over-year; non-GAAP net income was $128 million ($2.78 per diluted share).

• Adjusted EBITDA was $235 million, with a 44.2% margin, up 320 basis points year-over-year.

• Received multiple industry awards for product innovation, client satisfaction, and workplace excellence.

• Strong results attributed to automation strategy, new product innovation, and positive client feedback, leading to raised full-year outlook.

Financial highlights

• Recurring and other revenue was $505.2 million, up 11% year-over-year.

• Adjusted gross margin for Q2 was 83.6%, up from 83.2% last year.

• Free cash flow for the first half of 2026 was $427.6 million, with a margin of 33.8%; full-year free cash flow expected to exceed $650 million.

• Paid $18 million in dividends and repurchased 2.6 million shares ($346 million) in Q2; nearly 11 million shares repurchased YTD, reducing shares outstanding by 20%.

• Cash and cash equivalents at June 30, 2026 were $198 million, with $900 million drawn on a $2.1 billion credit facility.

Outlook and guidance

• Full-year 2026 revenue guidance raised to $2.197–$2.212 billion (7–8% growth); recurring and other revenue expected to grow 8–9%.

• Adjusted EBITDA guidance increased to $1.007–$1.022 billion, with a record margin of 46% at midpoint.

• Interest on funds held for clients projected at $105 million, assuming stable rates.

• Guidance assumes stable client employment growth and no significant rate changes for the remainder of the year.

• Research and development expenses expected to be lower in 2026 due to reduced headcount.