Paycom CEO reflects on first public quarter

By: Brian Brus The Journal Record August 6, 2014
OKLAHOMA CITY – Chad Richison is breathing a little easier now that his company’s first publicly reported quarter has passed with strong response from the market.

The employee-management software firmPaycom Software Inc. on Tuesday reported a net loss for the second quarter of $593,000, compared with net income of $360,000 for the same period a year earlier. But the company also had revenue of $33.3 million for the quarter, compared with analyst consensus estimates of $31.5 million, and the company’s quarterly revenue was up about 39 percent on a year-over-year basis.

Since pricing its initial public offering of stock in April at $15 per share, the company saw its stock fall more than 12 percent. Following the revenue forecasts executives provided Tuesday, stock prices rallied Wednesday and closed on the New York Stock Exchange under the symbol PAYC at $13.83, up 10.73 from the previous day. And analysts at Barclays upped their price target on Paycom shares from $21 to $22 on Wednesday.

In Tuesday’s earnings call, Richison said the company enjoyed accelerating growth in the second quarter. Annualized new recurring revenue, an estimate based on the first full month of revenue attributed to new clients, also increased significantly, he said. Paycom has 30 sales offices in 20 states and plans to open several more in the next two years to support more clients.

“We expect strong growth throughout the remainder of the year,” he said Wednesday. “Definitely going public has helped us attract … new customers and new clients. When you look at our growth, it is new customers coming to the Paycom technology platform. We see the whole thing transforming, and we’ll continue to lead that.”

The company provides personnel management tools online in what’s sometimes referred to in the industry as software-as-a-service, or SaaS. Among its most notable new applications is the company’s Paycom Survey, which allows the quick creation and analysis of online employee surveys to help employers reduce turnover. By enhancing self-service functions that include mobile devices, the company has been able to increase clients’ employee use by 170 percent compared with a year earlier.

“We started in 1998 and we’ve had growth ever since,” Richison said. “Our growth trajectory has been fairly consistent. So as far as what’s changed for us, I can’t say that there’s been much that has changed.”

Richison said the corporate culture at Paycom has remained the same since the IPO. Most of the directors have been on board since 2007, and the nature of his industry requires high levels of transparency anyway. The group knew they wanted the company to go public as long as five years ago, he said.

“This is not something that happened overnight,” he said. “To go from an accounting side, as far as being responsible with our growth, we’ve been doing that for a long time. But it’s just the beginning for us.”