Paycom Software, Inc. PAYC is set to report fourth-quarter 2024 results after market close on Feb. 12.

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PAYC anticipates fourth-quarter revenues in the range of $477-$484 million. The Zacks Consensus Estimate for revenues is pegged at $481.1 million, suggesting a rise of approximately 10.7% from the year-ago quarter’s sales of $434.6 million.

The consensus mark for earnings is pinned at $1.99 per share, indicating a year-over-year increase of 3.1%. The consensus estimate for the bottom line has remained unchanged over the past 60 days.

Adjusted EBITDA for the fourth quarter is expected to be in the range of $184.5-$191.5 million, suggesting an adjusted EBITDA margin of approximately 39.1% at the midpoint of the range.

Paycom’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 5.2%.

Factors to Consider Ahead of Paycom’s Q4 Results

Paycom’s fourth-quarter results are expected to reflect solid growth in recurring revenues, fueled by new client acquisitions and artificial intelligence (AI)-driven product innovations. The company’s continued investment in automation, international expansion and enhanced value propositions is likely to have strengthened its competitive position.

Paycom’s strategic push into AI-driven automation has likely played a key role in expanding its customer base. The integration of AI-enhanced payroll and HR tools is making its platform more efficient and attractive to businesses looking to streamline operations. Our estimate for recurring revenues is $472.9 million, reflecting a 10.7% year-over-year increase, underscoring the stickiness of its subscription-based model.

Paycom’s focus on improving Beti and GONE solutions has likely driven greater adoption. Beti enables employees to manage payroll independently, reducing administrative burdens, while GONE simplifies time-off requests. By offering a seamless employee experience, Paycom is increasing client engagement and improving retention.

Despite strong product innovation, Paycom’s growth is expected to have been impacted by headcount reductions across its client base due to a weaker macroeconomic environment. Layoffs and hiring slowdowns in various industries could have weighed on transaction volumes and overall demand for payroll services. Additionally, geopolitical tensions and economic uncertainty are anticipated to have caused potential clients to delay or scale back investments in HR software, creating near-term revenue headwinds.

Earnings Whispers for Paycom

Our proven model does not conclusively predict an earnings beat for Paycom this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

Paycom carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.00% at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Akamai Technologies AKAM has an Earnings ESP of +0.09% and carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

It is set to report fourth-quarter 2024 results on Feb. 20. The Zacks Consensus Estimate for AKAM’s fourth-quarter earnings per share (EPS) is pegged at $1.52, down by a penny over the past 60 days. AKAM shares have risen 3.7% over the past year.

Autohome ATHM has an Earnings ESP of +11.32% and carries a Zacks Rank #3 at present.

It is set to report fourth-quarter 2024 results on Feb. 20. The Zacks Consensus Estimate for Autohome’s fourth-quarter earnings is pegged at 53 cents per share, unchanged over the past 60 days, indicating a decline of 8.6% from the year-ago quarter’s reported figure. ATHM shares have plunged 22.2% over the past year.

Sabre SABR has an Earnings ESP of +25.93% and carries a Zacks Rank #3 at present.

It is set to report fourth-quarter 2024 results on Feb. 20. The Zacks Consensus Estimate for Sabre’s fourth-quarter bottom line is pegged at a loss of 7 cents per share, unchanged over the past 60 days. The consensus mark indicates a narrower loss than 12 cents reported in the year-ago quarter. SABR shares have tanked 20% over the past year.

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