Revenue growth has slowed to 9.8% in 2026Q2 from 13.6% in 2024Q4, while gross margins remain resilient at 83.2%, but operating margins have compressed from 57.2% in 2024Q1 to 31.7% in 2026Q2 due to rising R&D and SG&A costs.
Paycom Software, Inc. (PAYC) annual income statement — 14-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 |
|---|
| Sales/Revenue | 2.14B | 2.05B | 1.88B | 1.69B | 1.38B | 1.06B | 841.43M | 737.67M | 566.34M | 433.05M | 329.14M | 224.65M | 150.93M | 107.6M | 76.81M |
| Revenue Growth % | 9.22% | 8.95% | 11.19% | 23.16% | 30.29% | 25.44% | 14.07% | 30.25% | 30.78% | 31.57% | 46.51% | 48.85% | 40.27% | 40.09% | - |
| Cost of Goods Sold | 425.7M | 439.3M | 334.6M | 276.3M | 212.7M | 161.89M | 123.55M | 109.75M | 90.76M | 72.03M | 54.07M | 35.47M | 27.32M | 20.89M | 16.33M |
| COGS % of Revenue | - | 21.41% | 17.77% | 16.31% | 15.47% | 15.34% | 14.68% | 14.88% | 16.03% | 16.63% | 16.43% | 15.79% | 18.1% | 19.42% | 21.25% |
| Gross Profit | 1.72B | 1.61B | 1.55B | 1.42B | 1.16B | 893.64M | 717.89M | 627.92M | 475.57M | 361.02M | 275.07M | 189.18M | 123.61M | 86.71M | 60.48M |
| Gross Margin % | 80.11% | 78.59% | 82.23% | 83.69% | 84.53% | 84.66% | 85.32% | 85.12% | 83.97% | 83.37% | 83.57% | 84.21% | 81.9% | 80.58% | 78.75% |
| Gross Profit Growth % | - | 4.12% | 9.26% | 21.93% | 30.09% | 24.48% | 14.33% | 32.04% | 31.73% | 31.24% | 45.4% | 53.04% | 42.56% | 43.36% | - |
| Operating Expenses | 1.07B | 1.05B | 914.3M | 966.1M | 783.8M | 640.07M | 531.76M | 401.7M | 301.86M | 231.31M | 173.34M | 154.75M | 107.91M | 77.24M | 54.35M |
| OpEx % of Revenue | - | 50.94% | 48.55% | 57.04% | 57% | 60.64% | 63.2% | 54.46% | 53.3% | 53.41% | 52.66% | 68.88% | 71.5% | 71.78% | 70.76% |
| Selling, General & Admin | 781.7M | 761.8M | 593M | 705.7M | 585.7M | 485.83M | 413.92M | 306.82M | 240.49M | 191.07M | 144.53M | 140.38M | 99.05M | 71.41M | 48.63M |
| SG&A % of Revenue | - | 37.13% | 31.49% | 41.67% | 42.59% | 46.03% | 49.19% | 41.59% | 42.46% | 44.12% | 43.91% | 62.49% | 65.63% | 66.37% | 63.31% |
| Research & Development | 258.9M | 283.4M | 242.6M | 199M | 148.3M | 118.43M | 90.24M | 73.08M | 46.25M | 30.43M | 20.97M | 8.63M | 4.33M | 2.15M | 1.63M |
| R&D % of Revenue | - | 13.81% | 12.88% | 11.75% | 10.78% | 11.22% | 10.72% | 9.91% | 8.17% | 7.03% | 6.37% | 3.84% | 2.87% | 1.99% | 2.12% |
| Other Operating Expenses | 1.3M | 0 | 78.7M | 61.4M | 49.8M | 35.81M | 27.61M | 21.8M | 15.13M | 9.8M | 7.83M | 5.74M | 4.54M | 3.68M | 4.09M |
| Operating Income | 648.6M | 567.2M | 634.3M | 451.3M | 378.7M | 253.57M | 186.12M | 226.22M | 173.72M | 129.71M | 101.74M | 34.44M | 15.7M | 9.47M | 6.13M |
| Operating Margin % | 30.3% | 27.65% | 33.68% | 26.65% | 27.54% | 24.02% | 22.12% | 30.67% | 30.67% | 29.95% | 30.91% | 15.33% | 10.4% | 8.8% | 7.98% |
| Operating Income Growth % | - | -10.58% | 40.55% | 19.17% | 49.35% | 36.24% | -17.73% | 30.23% | 33.93% | 27.49% | 195.46% | 119.33% | 65.75% | 54.44% | - |
| EBITDA | 844.1M | 743.5M | 780.2M | 565.2M | 471.4M | 320.79M | 239.5M | 268.44M | 203.37M | 149.1M | 115.37M | 43.86M | 22.86M | 14.96M | 11.65M |
| EBITDA Margin % | 39.43% | 36.24% | 41.43% | 33.37% | 34.28% | 30.39% | 28.46% | 36.39% | 35.91% | 34.43% | 35.05% | 19.52% | 15.15% | 13.9% | 15.17% |
| EBITDA Growth % | 18.8% | -4.7% | 38.04% | 19.9% | 46.95% | 33.94% | -10.78% | 31.99% | 36.4% | 29.24% | 163.07% | 91.83% | 52.84% | 28.34% | - |
| D&A (Non-Cash Add-back) | 195.5M | 176.3M | 145.9M | 113.9M | 92.7M | 67.22M | 53.37M | 42.21M | 29.66M | 19.39M | 13.63M | 9.42M | 7.16M | 5.49M | 5.52M |
| EBIT | 702.8M | 622.8M | 652.4M | 474.3M | 392.1M | 255.96M | 185.96M | 227.03M | 175.48M | 128.64M | 102.05M | 34.95M | 13.08M | 10.67M | 6.49M |
| Net Interest Income | -16.4M | -3.4M | -3.4M | -1.9M | -2.5M | 0 | -19K | -940K | -766K | -911K | -1.04M | -1.43M | -3.42M | -9.27M | -6.98M |
| Interest Income | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Expense | 16.4M | 3.4M | 3.4M | 1.9M | 2.5M | 0 | 19K | 940K | 766K | 911K | 1.04M | 1.43M | 3.42M | 9.27M | 6.98M |
| Other Income/Expense | 35.6M | 52.2M | 14.7M | 21.1M | 10.9M | 2.4M | -187K | -137K | 996K | -1.98M | -728K | -910K | -6.04M | -8.07M | -6.62M |
| Pretax Income | 684.2M | 619.4M | 649M | 472.4M | 389.6M | 255.96M | 185.94M | 226.09M | 174.71M | 127.73M | 101.01M | 33.52M | 9.66M | 1.4M | -490K |
| Pretax Margin % | 31.96% | 30.19% | 34.46% | 27.89% | 28.33% | 24.25% | 22.1% | 30.65% | 30.85% | 29.5% | 30.69% | 14.92% | 6.4% | 1.3% | -0.64% |
| Income Tax | 196.5M | 166M | 147M | 131.61M | 108.19M | 60M | 42.48M | 45.51M | 37.65M | 9.84M | 13.4M | 12.58M | 3.99M | 4M | -84K |
| Effective Tax Rate % | 28.72% | 26.8% | 22.65% | 27.86% | 27.77% | 23.44% | 22.85% | 20.13% | 21.55% | 7.7% | 13.27% | 37.52% | 41.35% | 286.2% | 17.14% |
| Net Income | 487.6M | 453.4M | 502M | 340.79M | 281.39M | 195.96M | 143.45M | 180.58M | 137.06M | 66.81M | 43.84M | 20.95M | 5.66M | 7.71M | -406K |
| Net Margin % | 22.78% | 22.1% | 26.66% | 20.12% | 20.46% | 18.57% | 17.05% | 24.48% | 24.2% | 15.43% | 13.32% | 9.32% | 3.75% | 7.17% | -0.53% |
| Net Income Growth % | 17.27% | -9.68% | 47.31% | 21.11% | 43.6% | 36.6% | -20.56% | 31.74% | 105.17% | 52.39% | 109.31% | 269.86% | -26.56% | 1999.26% | - |
| Net Income (Continuing) | 487.6M | 453.4M | 502M | 340.79M | 281.39M | 195.96M | 143.45M | 180.58M | 137.06M | 123.49M | 70.42M | 20.95M | 5.66M | 7.71M | -406K |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -7.1M | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -3K | 0 |
| EPS (Diluted) | 10.62 | 8.08 | 8.92 | 5.88 | 4.84 | 3.37 | 2.46 | 3.09 | 2.34 | 1.13 | 0.74 | 0.36 | 0.11 | 0.01 | -0.01 |
| EPS Growth % | 27.33% | -9.42% | 51.7% | 21.49% | 43.62% | 36.99% | -20.39% | 32.05% | 107.08% | 52.7% | 105.56% | 227.27% | 787.1% | - | - |
| EPS (Basic) | - | 8.13 | 8.93 | 5.91 | 4.86 | 3.39 | 2.49 | 3.14 | 2.38 | 1.15 | 0.76 | 0.37 | 0.11 | 0.01 | -0.01 |
| Diluted Shares Outstanding | 45.9M | 56.1M | 56.3M | 57.97M | 58.17M | 58.19M | 58.28M | 58.4M | 58.58M | 58.79M | 58.97M | 57.92M | 51.86M | 48.37M | 48.37M |
| Basic Shares Outstanding | 45.8M | 55.8M | 56.2M | 57.71M | 57.93M | 57.88M | 57.62M | 57.56M | 57.71M | 57.84M | 57.55M | 56.5M | 49.78M | 47.69M | 47.69M |
| Dividend Payout Ratio | - | 18.7% | 16.89% | 19.03% | - | - | - | - | - | - | - | - | - | 70.15% | - |
Quick answers to the most common questions about buying PAYC stock.
For fiscal year 2025, Paycom Software, Inc. (PAYC) reported total revenue of $2.05B. This represents a 2571.1% increase compared to $76.8M in 2012.
Paycom Software, Inc. (PAYC) is profitable, generating $453.4M in net income for the fiscal year ending 2025 with a net profit margin of 22.1%.
Paycom Software, Inc. (PAYC) reported an operating income of $567.2M, resulting in an operating profit margin of 27.6%. This margin reflects the operational efficiency of the business before interest and taxes.
Paycom Software, Inc. (PAYC) generated $1.61B in gross profit for the year, representing a gross profit margin of 78.6%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Revenue growth deceleration and margin volatility
Metrics are mathematically derived from official filings.
Growth Deceleration Amidst Seasonal Swings
Paycom's revenue growth has slowed from double-digit rates to high-single digits, with 2026Q2 showing 9.8% growth, down from 13.6% in 2024Q4, according to reported quarterly figures.
The deceleration is evident across the last ten quarters, with the most recent quarter (2026Q2) posting 9.8% year-over-year growth, a notable decline from the 13.6% seen in 2024Q4. This suggests a maturing client base and potential market saturation, though the company still outpaces some peers like ADP's 6.7% growth. The sequential revenue dip from 2026Q1 to 2026Q2 (571.9M to 531.2M) reflects typical seasonality, but the underlying trend points to a gradual slowdown.
Gross Margin Resilience with Fluctuations
Gross margins have remained above 77% over the past ten quarters, with 2026Q2 at 83.2%, though they dipped to 77.9% in 2025Q3, indicating some volatility in cost of services.
Paycom's gross margin is consistently high, ranging from 77.9% to 84.3%, which is superior to peers like ADP (48.2%) and Paychex (74.3%). The fluctuation in gross margin, particularly the drop in 2025Q3, may be attributed to increased implementation costs or product mix shifts. However, the recent recovery to 83.2% in 2026Q2 suggests that the company retains pricing power and cost control, though investors should monitor whether this level is sustainable.
Operating Leverage Shows Inconsistency
Operating margins have swung from 57.2% in 2024Q1 to 22.8% in 2025Q3, with 2026Q2 at 31.7%, indicating that operating income growth is not consistently outpacing revenue growth.
The operating margin volatility is striking, with a peak of 57.2% in 2024Q1 (likely due to a one-time benefit) and a trough of 22.8% in 2025Q3. This suggests that operating leverage is not stable; SG&A and R&D expenses have grown at times faster than revenue, compressing margins. For instance, in 2025Q3, SG&A was $197.3M on $493.3M revenue, a 40% expense ratio, versus 2026Q2's 36.9% ratio. The company appears to be investing heavily in sales and product development, which may pressure near-term profitability.
Earnings Quality Clouded by SBC and Tax Anomalies
Net income quality is mixed, with stock-based compensation averaging around $30M per quarter, and 2024Q1's net margin of 49.4% appears anomalous, likely due to a one-time tax benefit.
Stock-based compensation (SBC) has been a consistent drag, ranging from $22M to $38M per quarter, which reduces reported earnings quality. The 2024Q1 quarter stands out with a net margin of 49.4% and EPS of $4.37, far above the typical 15-27% range, suggesting a one-time tax benefit or other non-operating gains. Excluding that quarter, net margins have been relatively stable around 20%, but the presence of SBC and potential tax rate fluctuations warrant scrutiny. Investors should adjust for SBC to assess true earnings power.
R&D and SG&A Escalation Pressures Margins
R&D expenses have grown from $50.5M in 2024Q1 to $74.8M in 2025Q2, a 48% increase, while SG&A has risen from $67.4M to $196.1M over the same period, indicating aggressive investment.
The cost structure reveals a deliberate push into product development and sales, with R&D spending increasing significantly, particularly in 2025 quarters. SG&A has also grown, though the 2024Q1 figure of $67.4M appears unusually low, possibly due to a reclassification or one-time item. The elevated spending in 2025 and 2026 has compressed operating margins, but it may be necessary to sustain growth in a competitive market. The company's ability to manage these costs while maintaining revenue growth will be key to margin recovery.
Margin Compression and Growth Fatigue Risks
Despite high gross margins, operating margins have declined from 57.2% in 2024Q1 to 31.7% in 2026Q2, and revenue growth has slowed, suggesting that the company may be losing pricing power or facing rising competition.
Short-sellers might argue that Paycom's growth is decelerating while costs are rising, leading to margin compression. The 2024Q1 operating margin of 57.2% was an outlier, but even excluding that, the trend from 2025Q1 (34.9%) to 2026Q2 (31.7%) shows a downward drift. Additionally, the company's revenue growth is now in the high-single digits, which may not justify its premium valuation relative to peers. If the company cannot control SG&A and R&D costs, operating leverage could turn negative, and the stock could de-rate.