Paycom CEO Calls 2027 'Transformational' As Analyst Presses On Lower R&D Spending
Chad Richison points to technologies now in testing and says R&D would rise if needed, as the company lifts its adjusted EBITDA outlook.
Paycom founder and CEO Chad Richison told analysts on the company's third-quarter earnings call on Wednesday that 2027 will be a "transformational" year, driven by technologies now in testing. Paycom, which makes cloud-based software for managing employees from recruitment to retirement, also raised its full-year revenue and adjusted EBITDA outlook.
Defending a lower R&D bill
A KeyBanc analyst noted that research and development spending fell in the third quarter, both from the prior quarter and from a year earlier, and asked what gives Richison confidence it is enough. His answer: "It's the result that the R&D that we're spending is delivering right now."
Richison said the focus is quality rather than spend, and that the company would not hold back if more were needed. "I see 2027 as being transformational for us as far as the technologies that we have in the hopper right now," he said, adding that several are in testing and will be released over the next year.
He also said Paycom released more solutions in the past year than in any previous 12-month period, and described asset management, a billable product launched last quarter, as having more than 300 clients.
Margins and a higher outlook
Chief Financial Officer Craig Boelte said third-quarter revenue was $544 million, up 10% from a year earlier, with recurring and other revenue of $519 million, up 11%. Adjusted EBITDA was $268 million, or 49.3% of revenue. Non-GAAP net income rose 37% to $150 million, or $3.37 a share.
Boelte raised the full-year adjusted EBITDA guide to $1.069 billion to $1.079 billion, and total revenue to $2.213 billion to $2.218 billion, about 8% growth. He called the margins sustainable: "We are our biggest user of our products," he said, so Paycom gets the same return its clients do.
Buybacks, debt and cash
Paycom bought back just $3 million of stock in the quarter and had $1.65 billion left on its authorization at quarter-end, Boelte said. Shares outstanding were about 44 million, down nearly 20% from about 55 million a year earlier.
The company paid down $150 million on its revolving credit facility, leaving $750 million outstanding and $194 million in cash. Free cash flow was $536 million for the first nine months of 2026, and Boelte said he expects it to be even stronger in 2027. The board approved a quarterly dividend of 37.5 cents a share, payable in early December.
Richison said he looks forward to meeting investors at the UBS conference in Phoenix on December 1 and the Barclays conference in San Francisco on December 9.
Sources
- Paycom Software Q3 2026 Earnings Call Transcript — benzinga.com
- Paycom Non-GAAP EPS of $3.37 beats by $0.57, revenue of $544M beats by $8.95M (NYSE:PAYC) | Seeking Alpha — seekingalpha.com
- Paycom: Q3 Earnings Snapshot — Associated Press
- Paycom: Q3 Earnings Snapshot | wusa9.com — Associated Press
- Paycom Announces Quarterly Cash Dividend – Company Announcement - FT.com — Financial Times
