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Company profile

All Things Mobile Analytic Inc., formerly Toron, Inc., is a technology company. The Company is focused on providing technology for micropayments and mobile device online gaming, telecommunications and fintech services. The Company distributes its owned and partner brands globally.

Closing Price
$0.13
Day's Change
0.00 (0.00%)
Bid
--
Ask
--
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--
Day's High
0.13
Day's Low
0.12
Volume
(Light)
Volume:
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10-day average volume:
41,511
5

Paycom Software, Inc. Reports Third Quarter 2020 Results

1:05 pm ET November 4, 2020 (BusinessWire) Print

--Third Quarter GAAP Net Income of $27.5 million, representing 14.0% of total revenues, or $0.47 per diluted share

--Third Quarter Non-GAAP Net Income of $40.6 million, or $0.70 per diluted share

--Third Quarter Adjusted EBITDA of $67.5 million, representing 34.3% of total revenues

Paycom Software, Inc. ("Paycom," "we" and "our") (NYSE: PAYC), a leading provider of comprehensive, cloud-based human capital management software, today announced its financial results for the quarter ended September 30, 2020.

"We had an excellent third quarter and continue to see very strong demand for our differentiated solutions," said Paycom's founder and CEO, Chad Richison. "We are putting greater distance between our product's value proposition and that of our competitors. We believe Paycom is the clear choice for those seeking a more efficient way to manage their Human Capital Management needs. With less than 5% market share today, we believe we have a long runway and are in a very good position to generate strong growth for years to come."

Financial Highlights for the Third Quarter of 2020

Total Revenues of $196.5 million represented a 12.3% increase compared to total revenues of $175.0 million in the same period last year. Recurring revenues of $192.7 million increased 12.4% from the comparable prior year period, and constituted 98.0% of total revenues.

GAAP Net Income was $27.5 million, or $0.47 per diluted share, compared to GAAP net income of $39.2 million, or $0.67 per diluted share, in the same period last year.

Non-GAAP Net Income(1) was $40.6 million, or $0.70 per diluted share, compared to $41.1 million, or $0.70 per diluted share, in the same period last year.

Adjusted EBITDA(1) was $67.5 million, compared to $66.6 million in the same period last year.

Cash and Cash Equivalents were $156.4 million as of September 30, 2020, compared to $133.7 million as of December 31, 2019.

Total Debt, Net was $31.3 million as of September 30, 2020, compared to $32.6 million as of December 31, 2019.

(1)Adjusted EBITDA and non-GAAP net income are non-GAAP financial measures. Please see the discussion below under the heading "Use of Non-GAAP Financial Information" and the reconciliations at the end of this release for additional information concerning these and other non-GAAP financial measures.

Financial Outlook

Paycom provides the following expected financial guidance:

Quarter Ending December 31, 2020:

Total Revenues in the range of $212.0 million to $214.0 million.

Adjusted EBITDA in the range of $76.0 million to $78.0 million.

We have not reconciled the forward-looking adjusted EBITDA range presented above and discussed on the teleconference call to net income, nor the forward-looking adjusted EBITDA margin discussed on the teleconference call to net income margin, because applicable information for future periods, on which these reconciliations would be based, is not readily available due to uncertainty regarding, and the potential variability of, depreciation and amortization, interest expense, taxes, non-cash stock-based compensation expense, change in fair value of our interest rate swap and other items. Accordingly, reconciliations of the forward-looking adjusted EBITDA range to net income and forward-looking adjusted EBITDA margin to net income margin are not available at this time without unreasonable effort. During the teleconference call, we also refer to a forward-looking estimate of our implied revenue growth plus adjusted EBITDA margin for 2020, or the "Rule of 50." Because we are unable to reconcile forward-looking adjusted EBITDA margin to net income margin without unreasonable effort, we are unable to reconcile "Rule of 50" to the most comparable GAAP measure without unreasonable effort.

Impact of the COVID-19 Pandemic

During the third quarter of 2020, we maintained the work-from-home arrangements implemented in March for the safety of our employees, while simultaneously ensuring our clients continued to receive the same level of service they have come to expect from our dedicated, one-on-one customer service model. As of September 30, 2020, 95% of our employees were working remotely. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees and clients. Although we currently have some insight with respect to the shorter-term effects of the COVID-19 pandemic to date, it is not possible at this time to estimate the full impact that the crisis could continue to have on our business and results of operations.

The COVID-19 pandemic has resulted in, and may continue to result in, headcount reductions across our client base. Because we charge our clients on a per-employee basis for certain services we provide, decreased headcount at our clients negatively impacted our recurring revenue in the third quarter of 2020, and we expect that our recurring revenue in future periods will continue to be negatively impacted by such headcount reductions until employment levels among our client base at the onset of the pandemic return to pre-pandemic levels. Despite growth in the number of clients in our base, employee headcount reductions at our clients as well as clients electing to defer payment of their share of Social Security taxes under the CARES Act resulted in nominal growth in our average funds held for clients balance in the third quarter of 2020, relative to the third quarter of 2019. Significantly lower average interest rates in 2020 had a negative effect on interest earned on funds held for clients and, consequently, recurring revenue growth in the third quarter of 2020. Our solution allows clients to seamlessly manage and communicate with their remote workforces. In the current work-from-home environment, our clients are recognizing the benefits of our focus on employee usage, as well as the strengths and advantages of our single database solution. Our salesforce continues to conduct all meetings with current and prospective clients virtually. The shift from in-person to video conference and teleconference sales meetings represents a unique opportunity to meet virtually with a greater number of client prospects in a given day than through in-person meetings.

Use of Non-GAAP Financial Information

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States ("GAAP"), we present certain non-GAAP financial measures in this press release and on the related teleconference call, including adjusted EBITDA, non-GAAP net income, adjusted gross profit, adjusted gross margin, adjusted sales and marketing expenses, adjusted total administrative expenses, adjusted research and development expenses and adjusted total research and development costs. Management uses these non-GAAP financial measures as supplemental measures to review and assess the performance of our core business operations and for planning purposes. We define (i) adjusted EBITDA as net income plus interest expense, taxes, depreciation and amortization, non-cash stock-based compensation expense, certain transaction expenses that are not core to our operations (if any) and the change in fair value of our interest rate swap, (ii) non-GAAP net income as net income plus non-cash stock-based compensation expense, certain transaction expenses that are not core to our operations (if any) and the change in fair value of our interest rate swap, all of which are adjusted for the effect of income taxes, (iii) adjusted gross profit as gross profit plus applicable non-cash stock-based compensation expense, (iv) adjusted gross margin as gross profit plus applicable non-cash stock-based compensation expense, divided by total revenues, (v) each adjusted expense item as the GAAP expense amount less applicable non-cash stock-based compensation expense, (vi) adjusted total research and development costs as total research and development costs (including the capitalized portion) less applicable non-cash stock-based compensation (including the capitalized portion), (vii) adjusted EBITDA margin as adjusted EBITDA (calculated as described in clause (i)) divided by total revenues and (viii) "Rule of 50" as revenue growth (expressed as a percentage) plus adjusted EBITDA margin (calculated as described in clause (vii)). The non-GAAP financial measures presented in this press release and discussed on the related teleconference call provide investors with greater transparency to the information used by management in its financial and operational decision-making. We believe these metrics are useful to investors because they facilitate comparisons of our core business operations across periods on a consistent basis, as well as comparisons with the results of peer companies, many of which use similar non-GAAP financial measures to supplement results under GAAP. In addition, adjusted EBITDA is a measure that provides useful information to management about the amount of cash available for reinvestment in our business, repurchasing common stock and other purposes. Management believes that the non-GAAP measures presented in this press release and discussed on the related teleconference call, when viewed in combination with our results prepared in accordance with GAAP, provide a more complete understanding of the factors and trends affecting our business and performance.

The non-GAAP financial measures presented in this press release and discussed on the related teleconference call are not measures of financial performance under GAAP and should not be considered a substitute for net income, gross profit, gross margin, research and development expenses, sales and marketing expenses, administrative expenses and total research and development costs. Non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, you should not consider these non-GAAP financial measures in isolation, or as a substitute for the consolidated statements of income data prepared in accordance with GAAP. The non-GAAP financial measures that we present may not be comparable to similarly titled measures of other companies and other companies may not calculate such measures in the same manner as we do.

Conference Call Details:

In conjunction with this announcement, Paycom will host a conference call today, November 4, 2020, at 5:00 p.m. Eastern time to discuss its financial results. To access this call, dial (833) 233-4461 (domestic) or (647) 689-4140 (international) and announce Paycom as the conference name to the operator. A live webcast as well as the replay of the conference call will be available on the Investor Relations page of Paycom's website at investors.paycom.com. A replay of this conference call can also be accessed by dialing (800) 585-8367 (domestic) or (416) 621-4642 (international) until November 11, 2020. The replay passcode is 5744927.

About Paycom

As a leader in payroll and HR technology, Oklahoma City-based Paycom redefines the human capital management industry by allowing companies to effectively navigate a rapidly changing business environment. Its cloud-based software solution is based on a core system of record maintained in a single database for all human capital management functions, providing the functionality that businesses need to manage the complete employment lifecycle, from recruitment to retirement. Paycom has the ability to serve businesses of all sizes and in every industry. As one of the leading human capital management providers, Paycom serves clients in all 50 states from offices across the country.

Forward-Looking Statements

Certain statements in this press release are, and certain statements on the related teleconference call may be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are any statements that refer to Paycom's estimated or anticipated results, other non-historical facts or future events and include, but are not limited to, statements regarding our business strategy; anticipated future operating results and operating expenses, cash flows, capital resources, dividends and liquidity; trends, opportunities and risks affecting our business, industry and financial results; future expansion or growth plans and potential for future growth; our ability to attract new clients to purchase our solution; our ability to retain clients and induce them to purchase additional applications; our ability to accurately forecast future revenues and appropriately plan our expenses; market acceptance of our solution and applications; our expectations regarding future revenues generated by certain applications; our ability to attract and retain qualified employees and key personnel; future regulatory, judicial and legislative changes; how certain factors affecting our performance correlate to improvement or deterioration in the labor market; our plan to open additional sales offices and our ability to effectively execute such plan; the sufficiency of our existing cash and cash equivalents to meet our working capital and capital expenditure needs over the next 12 months; the timeline for construction of our new Texas operations facility; our plans regarding our capital expenditures and investment activity as our business grows, including with respect to our new Texas operations facility and research and development; our plans to repurchase shares of our common stock through a stock repurchase plan; our expected income tax rate for future periods; and the impact of the novel coronavirus (COVID-19) pandemic on our business, results of operations, cash flows, financial condition and liquidity. In addition, forward-looking statements also consist of statements involving trend analyses and statements including such words as "anticipate," "believe," "could," "expect," "intend," "may," "might," "plan," "potential," "should," "will," "would," and similar expressions or the negative of such terms or other comparable terminology. These forward-looking statements speak only as of the date hereof and are subject to business and economic risks. As such, our actual results could differ materially from those set forth in the forward-looking statements as a result of the factors discussed in our filings with the Securities and Exchange Commission, including but not limited to those discussed in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. We do not undertake any obligation to update or revise the forward-looking statements to reflect events or circumstances that exist after the date on which such statements were made, except to the extent required by law.

                                                                                                                                                                                            Paycom Software, Inc.                                                                                                                                                                                            
                                                                                                                                                                                    Unaudited Consolidated Balance Sheets                                                                                                                                                                                    
                                                                                                                                                                                  (in thousands, except per share amounts)                                                                                                                                                                                   
                                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                    September 30, 2020                             December 31, 2019             
                                                                                                                                                                                                                                                          ----------------------------------------                                            ----------------------------------------
Assets                                                                                                                                                                                                                                                    
Current assets:                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                              $              156,398                        $              133,667  
    Cash and cash equivalents
                                                                                                                                                                                                                                                           12,355                      9,298  
    Accounts receivable
                                                                                                                                                                                                                                                           20,757                     13,561  
    Prepaid expenses
                                                                                                                                                                                                                                                              924                      1,158  
    Inventory
                                                                                                                                                                                                                                                            9,280                      4,020  
    Income tax receivable
                                                                                                                                                                                                                                                           56,245                     46,618  
    Deferred contract costs
                                                                                                                                                                                                                                                          -------------------- --------------------                                           -------------------- --------------------
                                                                                                                                                                                                                                                              255,959                    208,322  
        Current assets before funds held for clients
                                                                                                                                                                                                                                                        1,522,357                  1,662,778  
    Funds held for clients
                                                                                                                                                                                                                                                          -------------------- --------------------                                           -------------------- --------------------
                                                                                                                                                                                                                                                                1,778,316                  1,871,100  
            Total current assets
Property and equipment, net                                                                                                                                                                                                                                               275,624                    238,458  
Goodwill                                                                                                                                                                                                                                                       51,889                     51,889  
Long-term deferred contract costs                                                                                                                                                                                                                                         342,436                    292,134  
Other assets                                                                                                                                                                                                                                                       36,934                     33,336  
                                                                                                                                                                                                                                                          -------------------- --------------------                                           -------------------- --------------------
                                                                                                                                                                                                                                                                      $            2,485,199                        $            2,486,917  
            Total assets
                                                                                                                                                                                                                                                          ==================== ====================                                           ==================== ====================
Liabilities and Stockholders' Equity                                                                                                                                                                                                                                    
Current liabilities:                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                              $                9,237                        $                5,051  
    Accounts payable
                                                                                                                                                                                                                                                            7,940                     12,343  
    Accrued commissions and bonuses
                                                                                                                                                                                                                                                           27,722                     14,870  
    Accrued payroll and vacation
                                                                                                                                                                                                                                                           13,887                     11,105  
    Deferred revenue
                                                                                                                                                                                                                                                            1,775                      1,775  
    Current portion of long-term debt
                                                                                                                                                                                                                                                           44,883                     45,600  
    Accrued expenses and other current liabilities
                                                                                                                                                                                                                                                          -------------------- --------------------                                           -------------------- --------------------
                                                                                                                                                                                                                                                              105,444                     90,744  
        Current liabilities before client funds obligation
                                                                                                                                                                                                                                                        1,522,357                  1,662,778  
    Client funds obligation
                                                                                                                                                                                                                                                          -------------------- --------------------                                           -------------------- --------------------
                                                                                                                                                                                                                                                                1,627,801                  1,753,522  
            Total current liabilities
Deferred income tax liabilities, net                                                                                                                                                                                                                                      102,421                     91,217  
Long-term deferred revenue                                                                                                                                                                                                                                                 71,500                     65,139  
Net long-term debt, less current portion                                                                                                                                                                                                                                   29,554                     30,858  
Other long-term liabilities                                                                                                                                                                                                                                                21,524                     19,553  
                                                                                                                                                                                                                                                          -------------------- --------------------                                           -------------------- --------------------
                                                                                                                                                                                                                                                                  224,999                    206,767  
            Total long-term liabilities
                                                                                                                                                                                                                                                          -------------------- --------------------                                           -------------------- --------------------
                                                                                                                                                                                                                                                                1,852,800                  1,960,289  
            Total liabilities
                                                                                                                                                                                                                                                          -------------------- --------------------                                           -------------------- --------------------
Commitments and contingencies                                                                                                                                                                                                                                           
Stockholders' equity:                                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                                              616                        613  
    Common stock, $0.01 par value (100,000 shares authorized, 61,639 and 61,350 shares issued at September 30, 2020 and December 31, 2019, respectively; 57,605 and 57,660 shares outstanding at September 30, 2020 and December 31, 2019, respectively)
                                                                                                                                                                                                                                                          322,321                    257,501  
    Additional paid-in capital
                                                                                                                                                                                                                                                          695,252                    576,166  
    Retained earnings
                                                                                                                                                                                                                                                         (385,790 )                                    (307,652 )
    Treasury stock, at cost (4,034 and 3,689 shares at September 30, 2020 and December 31, 2019, respectively)
                                                                                                                                                                                                                                                          -------------------- --------------------                                           -------------------- --------------------
                                                                                                                                                                                                                                                                  632,399                    526,628  
            Total stockholders' equity
                                                                                                                                                                                                                                                          -------------------- --------------------                                           -------------------- --------------------
                                                                                                                                                                      Paycom Software, Inc.                                                                                                                                                                      
                                                                                                                                                           Unaudited Consolidated Statements of Income                                                                                                                                                           
                                                                                                                                                            (in thousands, except per share amounts)                                                                                                                                                             
                                                 
                                                                   Three Months Ended September 30,                                                                                                   Nine Months Ended September 30,                                                
                                                          ------------------------------------------------------------------------------------------------------------------------                                                ------------------------------------------------------------------------------------------------------------------------
                                       2020                                          2019                                 2020                       2019          
                                                          ----------------------------------------                                            ----------------------------------------                                            -------------------- --------------------                                           -------------------- --------------------
Revenues                                                            
Recurring                                                 $              192,664                        $              171,405                        $              609,109                        $              534,267  
Implementation and other                                3,868                      3,601                     11,378                      9,995  
                                                          -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
                                                      196,532                    175,006                    620,487                    544,262  
    Total revenues
                                                          -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Cost of revenues                                                    
Operating expenses                                     24,278                     21,088                     71,651                     66,153  
Depreciation and amortization                           6,634                      5,304                     18,865                     14,796  
                                                          -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
                                                       30,912                     26,392                     90,516                     80,949  
    Total cost of revenues
                                                          -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Administrative expenses                                             
Sales and marketing                                    62,146                     47,060                    173,228                    128,280  
Research and development                               21,772                     19,605                     65,171                     54,869  
General and administrative                             40,516                     25,728                    121,487                     98,386  
Depreciation and amortization                           7,150                      5,665                     20,209                     15,848  
                                                          -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
                                                      131,584                     98,058                    380,095                    297,383  
    Total administrative expenses
                                                          -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
                                                      162,496                    124,450                    470,611                    378,332  
        Total operating expenses
                                                          -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Operating income                                       34,036                     50,556                    149,876                    165,930  
Interest expense                               --                       (260 )                                         (19 )                                        (794 )
Other income (expense), net                               246                        195                       (522 )                                        (168 )
                                                          -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Income before income taxes                             34,282                     50,491                    149,335                    164,968  
Provision for income taxes                              6,800                     11,339                     30,249                     29,772  
                                                          -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Net income                                                $               27,482                        $               39,152                        $              119,086                        $              135,196  
                                                          ==================== ====================                                           ==================== ====================                                           ==================== ====================                                           ==================== ====================
Earnings per share, basic                                 $                 0.48                        $                 0.68                        $                 2.07                        $                 2.35  
Earnings per share, diluted                               $                 0.47                        $                 0.67                        $                 2.04                        $                 2.31  
Weighted average shares outstanding:                                
Basic                                                  57,603                     57,654                     57,609                     57,528  
                                                                                                               Paycom Software, Inc.                                                                                                                
                                                                                                  Unaudited Consolidated Statements of Cash Flows                                                                                                   
                                                                                                                  (in thousands)                                                                                                                    
                                                                                                                               Nine Months Ended September 30,                                                
                                                                                                                     ------------------------------------------------------------------------------------------------------------------------
                                                                                                  2020                                          2019                    
                                                                                                                     ----------------------------------------                                            ----------------------------------------
Cash flows from operating activities                                                                           
Net income                                                                                                           $              119,086                        $              135,196  
Adjustments to reconcile net income to net cash provided by operating activities:                              
                                                                                                                  39,073                     30,644  
    Depreciation and amortization
                                                                                                                  (1,374 )                                        (646 )
    Accretion of discount on available-for-sale securities
                                                                                                                      27                         26  
    Amortization of debt issuance costs
                                                                                                                  56,531                     41,122  
    Stock-based compensation expense
                                                                                                                    (424 )                                         (26 )
    Cash paid for derivative settlement
                                                                                                                   2,042                      1,789  
    Loss on derivative
                                                                                                                  11,204                     15,715  
    Deferred income taxes, net
Changes in operating assets and liabilities:                                                                   
                                                                                                                  (3,057 )                                         805  
    Accounts receivable
                                                                                                                  (7,196 )                                      (5,066 )
    Prepaid expenses
                                                                                                                      32                       (181 )
    Inventory
                                                                                                                  (3,757 )                                      (2,367 )
    Other assets
                                                                                                                 (56,922 )                                     (53,654 )
    Deferred contract costs
                                                                                                                   4,491                       (970 )
    Accounts payable
                                                                                                                  (5,260 )                                      (5,550 )
    Income taxes, net
                                                                                                                  (4,403 )                                      (2,239 )
    Accrued commissions and bonuses
                                                                                                                  12,853                      6,931  
    Accrued payroll and vacation
                                                                                                                   9,143                      8,714  
    Deferred revenue
                                                                                                                   2,239                      6,176  
    Accrued expenses and other current liabilities
                                                                                                                     -------------------- --------------------                                           -------------------- --------------------
                                                                                                                 174,328                    176,419  
            Net cash provided by operating activities
                                                                                                                     -------------------- --------------------                                           -------------------- --------------------
Cash flows from investing activities                                                                           
Purchase of short-term investments from funds held for clients                                                  (217,858 )                                     (61,268 )
Proceeds from maturities of short-term investments from funds held for clients                                    93,593                     54,200  
Purchases of property and equipment                                                                              (73,502 )                                     (71,080 )
                                                                                                                     -------------------- --------------------                                           -------------------- --------------------
                                                                                                                (197,767 )                                     (78,148 )
            Net cash used in investing activities
                                                                                                                     -------------------- --------------------                                           -------------------- --------------------
Cash flows from financing activities                                                                           
Repurchases of common stock                                                                                      (52,040 )                              --  
Withholding taxes paid related to net share settlements                                                          (26,099 )                                     (42,229 )
Payments on long-term debt                                                                                        (1,331 )                                      (1,331 )
Net change in client funds obligation                                                                           (140,421 )                                    (131,869 )
Payment of debt issuance costs                                                                            --                        (16 )
                                                                                                                     -------------------- --------------------                                           -------------------- --------------------
                                                                                                                (219,891 )                                    (175,445 )
            Net cash used in financing activities
                                                                                                                     -------------------- --------------------                                           -------------------- --------------------
                                                                                                                (243,330 )                                     (77,174 )
            Decrease in cash, cash equivalents, restricted cash and restricted cash equivalents
Cash, cash equivalents, restricted cash and restricted cash equivalents                                        
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period                   1,641,854                    986,464  
                                                                                                                     -------------------- --------------------                                           -------------------- --------------------
                                                                                                                                               Nine Months Ended September 30,                                                
                                                                                                                  ------------------------------------------------------------------------------------------------------------------------
                                                                                               2020                                          2019                    
                                                                                                                  ----------------------------------------                                            ----------------------------------------
Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents                   
Cash and cash equivalents                                                                                         $              156,398                        $              108,127  
Restricted cash included in funds held for clients                                                          1,242,126                    801,163  
                                                                                                                  -------------------- --------------------                                           -------------------- --------------------
Total cash, cash equivalents, restricted cash and restricted cash equivalents, end of period                      $            1,398,524                        $              909,290  
                                                                                                                  ==================== ====================                                           ==================== ====================
                                                                                         
                                                                                         
Supplemental disclosures of cash flow information:                                                          
Non-cash investing and financing activities:                                                                
Purchases of property and equipment, accrued but not paid                                                         $                2,707                        $                2,190  
Stock-based compensation for capitalized software                                                                 $                5,284                        $                4,287  
                                                                                                                                                                                                                                                     
                                                                                                                                                                                   Paycom Software, Inc.
                                                                                                                                                             Unaudited Reconciliations of GAAP to Non-GAAP Financial Measures
                                                                                                                                                                         (in thousands, except per share amounts)
                                                                                                                                                                                                                                                     
                                                                                Three Months Ended                                                                                                                 Nine Months Ended                                                       
                                                                                                                         September 30,                                                                                                                                                           September 30,
                                                                ------------------------------------------------------------------------------------------------------------------------                                                ------------------------------------------------------------------------------------------------------------------------
                                             2020                                          2019                                          2020                                          2019                    
                                                                ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------
Net income to adjusted EBITDA:                                            
Net income                                                      $               27,482                        $               39,152                        $              119,086                        $              135,196  
Interest expense                                     --                        260                         19                        794  
Provision for income taxes                                    6,800                     11,339                     30,249                     29,772  
Depreciation and amortization                                13,784                     10,969                     39,074                     30,644  
                                                                -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
                                                             48,066                     61,720                    188,428                    196,406  
        EBITDA
Non-cash stock-based compensation expense                    19,502                      4,454                     56,531                     41,122  
Change in fair value of interest rate swap                      (88 )                                         391                      1,618                      1,763  
                                                                -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Adjusted EBITDA                                                 $               67,480                        $               66,565                        $              246,577                        $              239,291  
                                                                ==================== ====================                                           ==================== ====================                                           ==================== ====================                                           ==================== ====================
Net income margin                                              14.0 %                                        22.4 %                                        19.2 %                                        24.8 %
                                                                                Three Months Ended                                                                                                                 Nine Months Ended                                                       
                                                                                                                         September 30,                                                                                                                                                           September 30,
                                                                ------------------------------------------------------------------------------------------------------------------------                                                ------------------------------------------------------------------------------------------------------------------------
                                             2020                                          2019                                          2020                                          2019                    
                                                                ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------
Net income to non-GAAP net income:                                        
Net income                                                      $               27,482                        $               39,152                        $              119,086                        $              135,196  
Non-cash stock-based compensation expense                    19,502                      4,454                     56,531                     41,122  
Change in fair value of interest rate swap                      (88 )                                         391                      1,618                      1,763  
Income tax effect on non-GAAP adjustments                    (6,332 )                                      (2,875 )                                     (22,802 )                                     (23,974 )
                                                                -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
                                                                $               40,564                        $               41,122                        $              154,433                        $              154,107  
        Non-GAAP net income
                                                                ==================== ====================                                           ==================== ====================                                           ==================== ====================                                           ==================== ====================
                                                       
Weighted average shares outstanding:                                      
Basic                                                        57,603                     57,654                     57,609                     57,528  
Diluted                                                      58,171                     58,383                     58,312                     58,403  
                                                       
Earnings per share, basic                                       $                 0.48                        $                 0.68                        $                 2.07                        $                 2.35  
Earnings per share, diluted                                     $                 0.47                        $                 0.67                        $                 2.04                        $                 2.31  
Non-GAAP net income per share, basic                            $                 0.70                        $                 0.71                        $                 2.68                        $                 2.68  
                                                                                                   Three Months Ended                                                                                                                 Nine Months Ended                                                       
                                                                                                                                            September 30,                                                                                                                                                           September 30,
                                                                                   ------------------------------------------------------------------------------------------------------------------------                                                ------------------------------------------------------------------------------------------------------------------------
                                                                2020                                          2019                                          2020                                          2019                    
                                                                                   ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------
Earnings per share to non-GAAP net income per share, basic:                                  
Earnings per share, basic                                                          $                 0.48                        $                 0.68                        $                 2.07                        $                 2.35  
Non-cash stock-based compensation expense                                         0.34                       0.08                       0.98                       0.71  
Change in fair value of interest rate swap                              --                       0.01                       0.03                       0.03  
Income tax effect on non-GAAP adjustments                                        (0.12 )                                       (0.06 )                                       (0.40 )                                       (0.41 )
                                                                                   -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Non-GAAP net income per share, basic                                               $                 0.70                        $                 0.71                        $                 2.68                        $                 2.68  
                                                                                   ==================== ====================                                           ==================== ====================                                           ==================== ====================                                           ==================== ====================
                                                                          
                                                                                                   Three Months Ended                                                                                                                 Nine Months Ended                                                       
                                                                                                                                            September 30,                                                                                                                                                           September 30,
                                                                                   ------------------------------------------------------------------------------------------------------------------------                                                ------------------------------------------------------------------------------------------------------------------------
                                                                2020                                          2019                                          2020                                          2019                    
                                                                                   ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------
Earnings per share to non-GAAP net income per share, diluted:                                
Earnings per share, diluted                                                        $                 0.47                        $                 0.67                        $                 2.04                        $                 2.31  
Non-cash stock-based compensation expense                                         0.34                       0.08                       0.97                       0.70  
Change in fair value of interest rate swap                              --                       0.01                       0.03                       0.03  
Income tax effect on non-GAAP adjustments                                        (0.11 )                                       (0.06 )                                       (0.39 )                                       (0.40 )
                                                                                   -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
                                                                                     Three Months Ended                                                                                                                 Nine Months Ended                                                       
                                                                                                                              September 30,                                                                                                                                                           September 30,
                                                                     ------------------------------------------------------------------------------------------------------------------------                                                ------------------------------------------------------------------------------------------------------------------------
                                                  2020                                          2019                                          2020                                          2019                    
                                                                     ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------
Adjusted gross profit:                                                         
Total revenues                                                       $              196,532                        $              175,006                        $              620,487                        $              544,262  
Less: Total cost of revenues                                     (30,912 )                                     (26,392 )                                     (90,516 )                                     (80,949 )
                                                                     -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Total gross profit                                               165,620                    148,614                    529,971                    463,313  
Plus: Non-cash stock-based compensation expense                    1,227                        750                      4,158                      3,955  
                                                                     -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
                                                                     $              166,847                        $              149,364                        $              534,129                        $              467,268  
        Total adjusted gross profit
                                                                     ==================== ====================                                           ==================== ====================                                           ==================== ====================                                           ==================== ====================
Gross margin                                                        84.3 %                                        84.9 %                                        85.4 %                                        85.1 %
                                                                                     Three Months Ended                                                                                                                 Nine Months Ended                                                       
                                                                                                                              September 30,                                                                                                                                                           September 30,
                                                                     ------------------------------------------------------------------------------------------------------------------------                                                ------------------------------------------------------------------------------------------------------------------------
                                                  2020                                          2019                                          2020                                          2019                    
                                                                     ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------
Adjusted sales and marketing expenses:                                         
Sales and marketing expenses                                         $               62,146                        $               47,060                        $              173,228                        $              128,280  
Less: Non-cash stock-based compensation expense                   (3,829 )                                        (344 )                                     (10,795 )                                      (5,453 )
                                                                     -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Adjusted sales and marketing expenses                                $               58,317                        $               46,716                        $              162,433                        $              122,827  
                                                                     ==================== ====================                                           ==================== ====================                                           ==================== ====================                                           ==================== ====================
                                                            
Total revenues                                                       $              196,532                        $              175,006                        $              620,487                        $              544,262  
Sales and marketing expenses as a % of revenues                     31.6 %                                        26.9 %                                        27.9 %                                        23.6 %
                                                                                      Three Months Ended                                                                                                                 Nine Months Ended                                                       
                                                                                                                               September 30,                                                                                                                                                           September 30,
                                                                      ------------------------------------------------------------------------------------------------------------------------                                                ------------------------------------------------------------------------------------------------------------------------
                                                   2020                                          2019                                          2020                                          2019                    
                                                                      ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------
Adjusted total administrative expenses:                                         
Total administrative expenses                                         $              131,584                        $               98,058                        $              380,095                        $              297,383  
Less: Non-cash stock-based compensation expense                   (18,275 )                                      (3,704 )                                     (52,373 )                                     (37,167 )
                                                                      -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Adjusted total administrative expenses                                $              113,309                        $               94,354                        $              327,722                        $              260,216  
                                                                      ==================== ====================                                           ==================== ====================                                           ==================== ====================                                           ==================== ====================
                                                             
Total revenues                                                        $              196,532                        $              175,006                        $              620,487                        $              544,262  
Total administrative expenses as a % of revenues                     67.0 %                                        56.0 %                                        61.3 %                                        54.6 %
                                                                                          Three Months Ended                                                                                                                 Nine Months Ended                                                       
                                                                                                                                   September 30,                                                                                                                                                           September 30,
                                                                          ------------------------------------------------------------------------------------------------------------------------                                                ------------------------------------------------------------------------------------------------------------------------
                                                       2020                                          2019                                          2020                                          2019                    
                                                                          ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------
Adjusted research and development expenses:                                         
Research and development expenses                                         $               21,772                        $               19,605                        $               65,171                        $               54,869  
Less: Non-cash stock-based compensation expense                        (2,115 )                                      (1,586 )                                      (7,270 )                                      (5,137 )
                                                                          -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Adjusted research and development expenses                                $               19,657                        $               18,019                        $               57,901                        $               49,732  
                                                                          ==================== ====================                                           ==================== ====================                                           ==================== ====================                                           ==================== ====================
                                                                 
Total revenues                                                            $              196,532                        $              175,006                        $              620,487                        $              544,262  
Research and development expenses as a % of revenues                     11.1 %                                        11.2 %                                        10.5 %                                        10.1 %
                                                                                             Three Months Ended                                                                                                                 Nine Months Ended                                                       
                                                                                                                                      September 30,                                                                                                                                                           September 30,
                                                                             ------------------------------------------------------------------------------------------------------------------------                                                ------------------------------------------------------------------------------------------------------------------------
                                                          2020                                          2019                                          2020                                          2019                    
                                                                             ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------
Total research and development costs:                                                  
Capitalized research and development costs                                   $               11,727                        $                7,089                        $               32,448                        $               22,726  
Research and development expenses                                         21,772                     19,605                     65,171                     54,869  
                                                                             -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Total research and development costs                                         $               33,499                        $               26,694                        $               97,619                        $               77,595  
                                                                    
Total revenues                                                               $              196,532                        $              175,006                        $              620,487                        $              544,262  
Total research and development costs as a % of revenues                     17.0 %                                        15.3 %                                        15.7 %                                        14.3 %
                                                                    
Adjusted total research and development costs:                                         
Total research and development costs                                         $               33,499                        $               26,694                        $               97,619                        $               77,595  
Less: Capitalized non-cash stock-based compensation                       (1,566 )                                        (334 )                                      (5,284 )                                      (4,287 )
Less: Non-cash stock-based compensation expense                           (2,115 )                                      (1,586 )                                      (7,270 )                                      (5,137 )
                                                                             -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------
Adjusted total research and development costs                                $               29,818                        $               24,774                        $               85,065                        $               68,171  
                                                                    
Total revenues                                                               $              196,532                        $              175,006                        $              620,487                        $              544,262  
                                                                                                                                                                                                                                                     
                                                                                                                                                                                   Paycom Software, Inc.
                                                                                                                                                             Unaudited Components of Non-Cash Stock-Based Compensation Expense
                                                                                                                                                                                      (in thousands)
                                                                                                                                                                                                                                                     
                                                                                Three Months Ended                                                                                                                 Nine Months Ended                                                       
                                                                                                                         September 30,                                                                                                                                                           September 30,
                                                                ------------------------------------------------------------------------------------------------------------------------                                                ------------------------------------------------------------------------------------------------------------------------
                                             2020                                          2019                                          2020                                          2020                    
                                                                ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------                                            ----------------------------------------
Non-cash stock-based compensation expense:                                
Operating expenses                                              $                1,227                        $                  750                        $                4,158                        $                3,955  
Sales and marketing                                           3,829                        344                     10,795                      5,453  
Research and development                                      2,115                      1,586                      7,270                      5,137  
General and administrative                                   12,331                      1,774                     34,308                     26,577  
                                                                -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------                                           -------------------- --------------------

View source version on businesswire.com: https://www.businesswire.com/news/home/20201104005675/en/

SOURCE: Paycom Software, Inc.

Paycom Software, Inc.
Investor Relations Contact:
James Samford, 800-580-4505
investors@paycom.com
comtex tracking

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