Paycom to Report Q1 Earnings: What's in Store for the Stock?

Paycom Software, Inc. PAYC is set to report first-quarter 2025 results on May 7, after market close.

The Zacks Consensus Estimate for first-quarter earnings is pinned at $2.60 per share, indicating a year-over-year increase of 0.4%. The consensus estimate for the bottom line has been revised downward by 3 cents over the past 60 days.

The Zacks Consensus Estimate for Paycom’s first-quarter revenues is pegged at $525.6 million, suggesting a rise of approximately 5.2% from the year-ago quarter’s sales of $499.9 million.

Paycom’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 5.2%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Factors Likely to Influence PAYC’s Q1 Results

Paycom’s first-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 $500.7 million, reflecting a 7.5% 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, the company 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 PAYC Stock

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.

Though Paycom sports a Zacks Rank #1 at present, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Per our model, BILL Holdings BILL, Fortinet FTNT and Advanced Micro Devices AMD have the right combination of elements to post an earnings beat in their upcoming releases.

BILL Holdings has an Earnings ESP of +0.30% and carries a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

It is set to report third-quarter fiscal 2025 results on May 8. The Zacks Consensus Estimate for BILL Holdings’ third-quarter earnings is pegged at 37 cents per share and has remained unchanged over the past 60 days. The consensus mark indicates a year-over-year decline of 38.3%. BILL Holdings shares have tanked 28% over the past year.

Fortinet is set to report first-quarter 2025 results on May 7. It has an Earnings ESP of +3.77% and carries a Zacks Rank #3 at present.

The Zacks Consensus Estimate for Fortinet’s first-quarter earnings per share is pegged at 53 cents, remained unchanged over the past 60 days and indicates year-over-year growth of 23.3%. Shares of Fortinet have surged 80.5% over the past year.

Advanced Micro Devices is set to report first-quarter 2025 results on May 6. It has an Earnings ESP of +0.74% and carries a Zacks Rank #3 at present.

The Zacks Consensus Estimate for Advanced Micro Devices’ first-quarter earnings is pegged at 93 cents per share, unchanged over the past 60 days, indicating an increase of 50% from the year-ago quarter’s reported figure. Shares of Advanced Micro Devices have plunged 36.6% over the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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