Will be interesting to see full year results. Revenue growth was trending well above prior year but not as strong as originally planned. Their product is marketed as a tool that reduces payroll errors, and it does, but they generate a decent amount of revenue when their customers process extra payrolls beyond their scheduled payroll cycles. One of the solutions rolled out in 2021, Beti (Better Employee Transaction Interface), is an employee self-service tool that puts payroll responsibility on the employees. It may be too effective in some cases as it is resulting in cannibalization of off cycle revenue. The market analysts asked multiple questions about this situation in the 3rd Quarter earnings call. Paycom also appears to be seeking low hanging fruit with expansion into Canada and Mexico. Investors should keep an eye on customer retention as much as revenue growth.
this is actually not the case. one of the biggest reasons they were told by some very very large accounts, that they couldn't make the switch to paycom was because of out of country employees. and that once the system supported that, then it was possible for those companies to make the switch. now i am out of the loop these days on new customers so i don't know if any of those companies have now switched over, but i can tell you that the move into canada and mexico was not for just some low hanging fruit, but at the request of some mega corporations. and the thought was since they were making the system work for those countries anyways, why not also look at smaller companies in those markets, since it's just additional revenue.
Now that the % revenue growth guidance for next year is out of the bag from the Q3 earnings call, it's going to be interesting to see how client (revenue) retention is presented. If a client generated $X base and an additional $Y in off-cycle payroll fees, but the "cannabalization" referenced knocks majority of those $Y off, then the the revenue retention rate probably shouldn't stay at the 93%/94% that has been referenced in the last 3 years of EOY calls and if it does, a lot is going to have to be put on the table as to why.
I would think that how they talk through that is probably going to have a major impact on the stock price for the next few years. Chad is 4 or 5 years out from needing to hit $1,000.00 to get his massive award he was in the news for a few years back, pretty hard to see how that happens, but this might be the important earnings call to set the stage for that kind of rally/growth. Alternatively, the volume on the stock after Q3 earnings eclipsed 20% so without knowing how ownership changed there, Chad could also be under some fire in which case this earnings call is also super important.
The amount of law firms that jumped on the "file against Paycom for your losses" train was insane. It's 90% of what I saw on articles related to PAYC in my ETrade app the last few months.
Chad definitely sounds a bit scared/concerned in the recently leaked staff meeting. But I'm wondering if he was cool with the idea of the leak? Definitely confirms for investors that his give-a-**** level is still pretty high. Whether Kanban and Agile will be a magic bullet for PAYC in 2024 is a different question, of course.
https://thelostogle.com/2024/01/18/s...lems-at-paycom
https://www.youtube.com/watch?v=11YRTZIr--k
Meh... definitely some exaggeration from lostogle. Interesting meeting content for people who are on the inside or otherwise know about Paycom, but definitely not "big problems". This sounds more to me like a CEO trying to reach his $750M stock grant rather than someone worried about their job.
The company still prints money with a strong balance sheet so it is not in need of a magic bullet overall.
So now they have a CO-CEO, I can't imagine this is a massive positive for Chad. I know it'll be spun that way, but this is a demotion for him. Seems like there is starting to be some loss of belief in him as the leader.
There are currently 1 users browsing this thread. (0 members and 1 guests)
Bookmarks