Paycom Software (PAYC) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenues reached $530.5M, up 6.1% year-over-year, driven by new clients, expanded product usage, and pricing strategies, with recurring and other revenues comprising 94.2% of total revenues.

• Product innovation and automation, especially with GONE and Beti, are driving client ROI and satisfaction, reflected in a 16-point year-over-year increase in Net Promoter Score.

• Adjusted EBITDA for Q1 2025 was $253.2M, up 10.3% from $229.5M in Q1 2024, representing 47.7% of revenues.

• Net income for Q1 2025 was $139.4M (26% of revenues), or $2.48 per diluted share; non-GAAP net income was $157.7M, or $2.80 per diluted share, with the year-over-year decline due to a prior-year one-time benefit.

• Recognized as one of America's best large employers and most trustworthy companies.

Financial highlights

• Total revenue for Q1 2025 was $530.5M, up 6.1% year-over-year; recurring and other revenues grew 7.3% to $500M.

• Interest on funds held for clients declined 10% year-over-year to $30.5M due to 2024 rate cuts.

• Adjusted EBITDA was $253.2M, up 10.3% year-over-year, with a margin of 47.7%.

• Cash and cash equivalents increased to $520.8M; no debt as of March 31, 2025.

• Free cash flow was $144.8M, with a margin of 27.3%, up from 20.2% last year.

Outlook and guidance

• Raised full-year 2025 revenue guidance to $2.023–2.038B, up 8% year-over-year at midpoint.

• Recurring and other revenue expected to grow over 9% year-over-year, with strongest growth in Q4.

• Adjusted EBITDA guidance raised to $843–858M, with margin expansion to 42% at midpoint.

• Interest on funds held for clients projected at $110M for 2025, down 12% year-over-year.

• Full-year GAAP and non-GAAP tax rates expected at 28% and 27%, respectively; stock compensation at 8% of revenues.