Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-36393

Paycom Software, Inc.

(Exact name of registrant as specified in its charter)


Delaware		80-0957485
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

    7501 W. Memorial Road
Oklahoma City, Oklahoma

    73142

    (Address of principal executive offices)

     (Zip Code)

(405) 722-6900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	PAYC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer	☐
Non-accelerated filer ☐	Smaller reporting company	☐
	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 23, 2024, there were 57,432,442 shares of common stock, par value of $0.01 per share, outstanding, including 1,497,458 shares of restricted stock.

Paycom Software, Inc.


	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Unaudited Consolidated Balance Sheets	3
	Unaudited Consolidated Statements of Comprehensive Income	4
	Unaudited Consolidated Statements of Stockholders’ Equity	5
	Unaudited Consolidated Statements of Cash Flows	6
	Notes to the Unaudited Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
Signatures		34

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Paycom Software, Inc.

Unaudited Consolidated Balance Sheets

(in thousands, except per share amounts)


	June 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	346,456		$	294,025
Accounts receivable		20,034			16,442
Prepaid expenses		46,529			37,613
Inventory		1,415			1,383
Income tax receivable		—			18,391
Deferred contract costs		128,728			118,206
Current assets before funds held for clients		543,162			486,060
Funds held for clients		2,303,159			2,327,366
Total current assets		2,846,321			2,813,426
Property and equipment, net		531,884			498,197
Intangible assets, net		48,159			50,112
Goodwill		51,889			51,889
Long-term deferred contract costs		727,956			680,272
Other assets		106,535			103,643
Total assets	$	4,312,744		$	4,197,539
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	14,997		$	13,875
Income tax payable		10,281			—
Accrued commissions and bonuses		22,227			30,492
Accrued payroll and vacation		60,533			56,086
Deferred revenue		31,432			22,812
Accrued expenses and other current liabilities		84,215			83,302
Current liabilities before client funds obligation		223,685			206,567
Client funds obligation		2,303,198			2,328,076
Total current liabilities		2,526,883			2,534,643
Deferred income tax liabilities, net		136,213			143,750
Long-term deferred revenue		110,928			107,657
Other long-term liabilities		112,189			108,453
Total long-term liabilities		359,330			359,860
Total liabilities		2,886,213			2,894,503
Commitments and contingencies (Note 12)
Stockholders’ equity:
Common stock, $0.01 par value (100,000 shares authorized, 62,887 and 62,675 shares issued at June 30, 2024 and December 31, 2023, respectively; 56,151 and 56,528 shares outstanding at June 30, 2024 and December 31, 2023, respectively)		629		627
Additional paid-in capital		667,197			724,493
Retained earnings		1,743,608			1,469,981
Accumulated other comprehensive earnings (loss)		(305	)		(1,039	)
Treasury stock, at cost (6,736 and 6,147 shares at June 30, 2024 and December 31, 2023, respectively)		(984,598	)		(891,026	)
Total stockholders’ equity		1,426,531			1,303,036
Total liabilities and stockholders’ equity	$	4,312,744		$	4,197,539

See accompanying notes to the unaudited consolidated financial statements.

Paycom Software, Inc.

Unaudited Consolidated Statements of Comprehensive Income

(in thousands, except per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenues
Recurring	$	430,400		$	394,522		$	922,296		$	838,943
Implementation and other		7,112			6,617			15,097			13,833
Total revenues		437,512			401,139			937,393			852,776
Cost of revenues
Operating expenses		67,451			54,617			131,121			107,702
Depreciation and amortization		16,433			12,811			31,394			24,958
Total cost of revenues		83,884			67,428			162,515			132,660
Administrative expenses
Sales and marketing		106,864			106,435			222,388			210,009
Research and development		62,371			49,118			112,880			91,787
General and administrative		70,072			75,965			21,968			141,570
Depreciation and amortization		19,181			14,927			36,688			29,052
Total administrative expenses		258,488			246,445			393,924			472,418
Total operating expenses		342,372			313,873			556,439			605,078
Operating income		95,140			87,266			380,954			247,698
Interest expense		(782	)		(602	)		(1,564	)		(1,439	)
Other income (expense), net		4,787			6,183			9,796			12,187
Income before income taxes		99,145			92,847			389,186			258,446
Provision for income taxes		31,175			28,331			74,029			74,634
Net income	$	67,970		$	64,516		$	315,157		$	183,812
Earnings per share, basic	$	1.20		$	1.11		$	5.58		$	3.17
Earnings per share, diluted	$	1.20		$	1.11		$	5.57		$	3.17
Weighted average shares outstanding:
Basic		56,451			57,920			56,499			57,895
Diluted		56,771			58,033			56,548			58,050
Comprehensive earnings:
Net income	$	67,970		$	64,516		$	315,157		$	183,812
Unrealized net gains on available-for-sale securities		318			(235	)		1,155			815
Tax effect		(128	)		95			(421	)		(105	)
Other comprehensive income, net of tax		190			(140	)		734			710
Comprehensive earnings:	$	68,160		$	64,376		$	315,891		$	184,522

See accompanying notes to the unaudited consolidated financial statements.

Paycom Software, Inc.

Unaudited Consolidated Statements of Stockholders’ Equity

(in thousands)


	Common Stock				Additional			Retained			Accumulated Other			Treasury Stock					Total
	Shares		Amount		Paid-in Capital			Earnings			Comprehensive Loss			Shares		Amount			Stockholders’ Equity
Balances at December 31, 2022		62,518	$	625	$	576,622		$	1,196,968		$	(3,703	)		4,651	$	(587,905	)	$	1,182,607
Vesting of restricted stock		7		—		—			—			—			—		—			—
Stock-based compensation		—		—		32,344			—			—			—		—			32,344
Repurchases of common stock		—		—		—			—			—			2		(626	)		(626	)
Net income		—		—		—			119,296			—			—		—			119,296
Other comprehensive earnings (loss), net of tax		—		—		—			—			850			—		—			850
Balances at March 31, 2023		62,525	$	625	$	608,966		$	1,316,264		$	(2,853	)		4,653		(588,531	)	$	1,334,471
Vesting of restricted stock		115		1		(1	)		—			—			—		—			—
Stock-based compensation		—		—		41,000			—			—			—		—			41,000
Repurchases of common stock		—		—		—			—			—			38		(10,441	)		(10,441	)
Dividends declared ($0.375 per share)		—		—		—			(22,721	)		—			—		—			(22,721	)
Net income		—		—		—			64,516			—			—		—			64,516
Other comprehensive earnings (loss), net of tax		—		—		—			—			(140	)		—		—			(140	)
Balances at June 30, 2023		62,640	$	626	$	649,965		$	1,358,059		$	(2,993	)		4,691		(598,972	)	$	1,406,685


	Common Stock				Additional			Retained			Accumulated Other			Treasury Stock					Total
	Shares		Amount		Paid-in Capital			Earnings			Comprehensive Loss			Shares		Amount			Stockholders’ Equity
Balances at December 31, 2023		62,675	$	627	$	724,493		$	1,469,981		$	(1,039	)		6,147	$	(891,026	)	$	1,303,036
Vesting of restricted stock		44		—		—			—			—			—		—			—
Stock-based compensation		—		—		(89,675	)		—			—			—		—			(89,675	)
Dividends declared ($0.375 per share)		—		—		—			(19,977	)		—			—		—			(19,977	)
Repurchases of common stock		—		—		—			—			—			15		(3,052	)		(3,052	)
Net income		—		—		—			247,187			—			—		—			247,187
Other comprehensive earnings (loss), net of tax		—		—		—			—			544			—		—			544
Balances at March 31, 2024		62,719	$	627	$	634,818		$	1,697,191		$	(495	)		6,162	$	(894,078	)	$	1,438,063
Vesting of restricted stock		168		2		(2	)		—			—			—		—			—
Stock-based compensation		—		—		32,381			—			—			—		—			32,381
Dividends declared ($0.375 per share)		—		—		—			(21,553	)		—			—		—			(21,553	)
Repurchases of common stock		—		—		—			—			—			574		(90,520	)		(90,520	)
Net income		—		—		—			67,970			—			—		—			67,970
Other comprehensive earnings (loss), net of tax		—		—		—			—			190			—		—			190
Balances at June 30, 2024		62,887	$	629	$	667,197		$	1,743,608		$	(305	)		6,736	$	(984,598	)	$	1,426,531

See accompanying notes to the unaudited consolidated financial statements.

Paycom Software, Inc.

Unaudited Consolidated Statements of Cash Flows

(in thousands)


	Six Months Ended June 30,
	2024			2023
Cash flows from operating activities
Net income	$	315,157		$	183,812
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		68,082			54,010
Accretion of discount on available-for-sale securities		(108	)		(253	)
Non-cash marketing expense		798			839
Loss (Gain) on disposition of property and equipment		12			(21	)
Amortization of debt issuance costs		552			620
Stock-based compensation expense		(69,670	)		63,185
Deferred income taxes, net		(7,798	)		1,706
Other		(161	)		111
Changes in operating assets and liabilities:
Accounts receivable		(3,592	)		6,650
Prepaid expenses		(8,345	)		(10,597	)
Inventory		431			336
Other assets		(3,445	)		(9,057	)
Deferred contract costs		(55,198	)		(62,489	)
Accounts payable		91			(10,277	)
Income taxes, net		28,672			3,645
Accrued commissions and bonuses		(8,265	)		(6,560	)
Accrued payroll and vacation		4,197			4,954
Deferred revenue		11,891			6,817
Accrued expenses and other current liabilities		7,431			24,560
Net cash provided by operating activities		280,732			251,991
Cash flows from investing activities
Purchases of investments from funds held for clients		—			(25,000	)
Proceeds from investments from funds held for clients		165,000			25,000
Purchases of property and equipment		(93,335	)		(83,422	)
Proceeds from sale of property and equipment		13			44
Net cash provided by (used in) investing activities		71,678			(83,378	)
Cash flows from financing activities
Repurchases of common stock		(80,761	)		—
Withholding taxes paid related to net share settlements		(12,410	)		(11,067	)
Dividends paid		(42,400	)		(21,731	)
Net change in client funds obligation		(24,878	)		(201,552	)
Net cash (used in) financing activities		(160,449	)		(234,350	)
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents		191,961			(65,737	)
Cash, cash equivalents, restricted cash and restricted cash equivalents
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period		2,422,760			2,409,095
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period	$	2,614,721		$	2,343,358

See accompanying notes to the unaudited consolidated financial statements.

Paycom Software, Inc.

Unaudited Consolidated Statements of Cash Flows, continued

(in thousands)


	Six Months Ended June 30,
	2024		2023
Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents
Cash and cash equivalents	$	346,456	$	536,545
Restricted cash included in funds held for clients		2,268,265		1,806,813
Total cash, cash equivalents, restricted cash and restricted cash equivalents, end of period	$	2,614,721	$	2,343,358

Supplemental disclosures of cash flow information:
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid	$	8,507	$	11,968
Stock-based compensation for capitalized software	$	8,797	$	7,752
Right of use assets obtained in exchange for operating lease liabilities	$	11,933	$	16,341

See accompanying notes to the unaudited consolidated financial statements.

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share and per unit amounts)

ORGANIZATION AND DESCRIPTION OF BUSINESS

Paycom Software, Inc. (“Software”), together with its wholly owned subsidiaries (collectively, the “Company”), is a leading provider of a comprehensive, cloud-based human capital management (“HCM”) solution delivered as Software-as-a-Service. Unless we state otherwise or the context otherwise requires, the terms “we,” “our,” “us” and the “Company” refer to Software and its consolidated subsidiaries.

We provide functionality and data analytics that businesses need to manage the complete employment lifecycle, from recruitment to retirement. Our solution requires virtually no customization and is based on a core system of record maintained in a single database for all HCM functions, including payroll, talent acquisition, talent management, human resources (“HR”) management and time and labor management applications.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our significant accounting policies are discussed in “Note 2. Summary of Significant Accounting Policies” in the notes to our audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”) filed with the Securities and Exchange Commission (“SEC”) on February 15, 2024.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the financial results of Software and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding interim financial statements that permit reduced disclosure for interim periods. Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s results for the interim periods presented. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes presented in the Form 10-K. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results expected for the full year.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include income taxes, loss contingencies, the useful life of property and equipment and intangible assets, the life of our client relationships, the fair value of our stock-based awards and the fair value of our financial instruments, intangible assets and goodwill. These estimates are based on historical experience, where applicable, and other assumptions that management believes are reasonable under the circumstances. Actual results could materially differ from these estimates.

Seasonality

Our revenues are seasonal in nature. Generally, we expect our first and fourth quarter recurring revenues to be higher than other quarters during the year because payroll tax filing forms and Affordable Care Act forms are typically processed in the first quarter, and unscheduled payroll runs (such as bonuses) for our clients are typically concentrated in the fourth quarter. In addition, these seasonal fluctuations in recurring revenues impact operating income.

Funds Held for Clients and Client Funds Obligation

As part of our payroll and tax filing services, we (i) collect client funds to satisfy their respective payroll and employment tax obligations, (ii) remit such funds to accounts designated by our clients and to the appropriate taxing authorities, as applicable, and (iii) manage client tax filings and any related correspondence with taxing authorities. Amounts collected from clients for their employment taxes are invested by us, and we earn interest on these funds during the interval between receipt and disbursement.

These investments are shown in our consolidated balance sheets as funds held for clients, and the associated liability for the tax filings is shown as client funds obligation. The liability is recorded in the accompanying consolidated balance sheets at the time we obtain the funds from clients. The client funds obligation represents liabilities that will be repaid within one year of the consolidated balance sheet date. We typically invest funds held for clients in money market funds, demand deposit accounts, certificates of deposit, commercial paper and U.S. treasury securities. Short-term investments in instruments with an original maturity of less than three months are classified as cash and cash equivalents within funds held for clients in the consolidated balance sheets. Investments in instruments with an original maturity greater than three months are classified as available-for-sale securities and are also included within funds held for clients in the consolidated balance sheets.

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share and per unit amounts)

These available-for-sale securities are recorded at fair value, with the difference between the amortized cost and fair value of these available-for-sale securities recorded as unrealized net gains (losses) on available-for-sale securities, and are included within comprehensive earnings (loss) in the consolidated statements of comprehensive income. Funds held for clients are classified as a current asset in the consolidated balance sheets because the funds are held solely to satisfy the client funds obligation. Additionally, the funds held for clients is classified as restricted cash and restricted cash equivalents and presented within the reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents on the consolidated statements of cash flows.

The Company reports the cash flows related to the purchases of investments from funds held for clients and related to the proceeds from the maturities of investments from funds held for clients on a gross basis in the cash flows from investing activities section of the consolidated statements of cash flows. Additionally, the Company reports cash flows related to cash received from and paid on behalf of clients on a net basis within the net change in client funds obligation in the cash flows from financing activities section of the consolidated statements of cash flows.

Stock Repurchase Plan

In May 2016, our Board of Directors authorized a stock repurchase plan allowing for the repurchase of shares of our common stock in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b5-1 programs. Since the initial authorization of the stock repurchase plan, our Board of Directors has amended and extended and authorized new stock repurchase plans from time to time. In August 2022, our Board of Directors authorized the repurchase of up to $1.1 billion of our common stock over a two-year period expiring on August 15, 2024. As of June 30, 2024, there was $705.9 million available for repurchases under our stock repurchase plan. On July 29, 2024, our Board of Directors increased and extended the stock repurchase plan. See Note 14 for additional information. Our stock repurchase plan may be suspended or discontinued at any time. The actual timing, number and value of shares repurchased depends on a number of factors, including the market price of our common stock, general market and economic conditions, shares withheld for taxes associated with the vesting of equity incentive awards and other corporate considerations.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires incremental disclosures in annual and interim periods related reportable segments, and segment expenses but does not change the definition of a segment, the method for determining segments, or the criteria for aggregating operating segments into reportable segments. This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are assessing the impact of this ASU on our consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information on income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are assessing the impact of this ASU on our consolidated financial statements and disclosures.

REVENUE

Revenues are recognized when control of the promised goods or services is transferred to our clients in an amount that reflects the consideration we expect to be entitled to for those goods or services. Substantially all of our revenues are from contracts with clients. Sales taxes and other applicable taxes are excluded from revenues.

Recurring Revenues

Recurring revenues are derived primarily from our payroll, talent acquisition, talent management, HR management and time and labor management applications as well as fees charged for form ﬁlings and delivery of client payroll checks and reports. Payroll includes Beti®, Payroll and Tax Management, Vault, Everyday®, Paycom Pay®, Client Action Center™, Expense Management, Mileage Tracker, Garnishment Administration and GL Concierge applications. Talent acquisition includes our Applicant Tracking, Candidate Tracker, Enhanced Background Checks®, Onboarding, E-Verify® and Tax Credits applications. Talent management includes our Employee Self-Service®, Compensation Budgeting, Performance Management, Position Management, My Analytics and Paycom Learning applications. HR management includes our Manager on-the-Go®, Direct Data Exchange®, Ask Here, Documents and Checklists, Government and Compliance, Beneﬁts Administration/Benefits to Carrier, Benefit Enrollment Service, COBRA

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share and per unit amounts)

Administration, Personnel Action Forms and Performance Discussion Forms, Surveys, Enhanced ACA and Clue® applications. Time and labor management includes Time and Attendance, Scheduling, Time-Off Requests with GONE®, Labor Allocation, Labor Management Reports/Push Reporting®, Geofencing/Geotracking and Microfence® tools and applications. In addition, with Global HCM™, a number of our HCM applications and tools are available in 15 languages and dialects and are accessible to users in more than 180 countries.

The performance obligations related to recurring revenues are generally satisfied during each client’s payroll period, with the agreed-upon fee being charged and collected as part of our processing of the client’s payroll. Recurring revenues are recognized at the conclusion of processing of each client’s payroll period, when each respective payroll client is billed. Collectability is reasonably assured as the fees are generally collected through an automated clearing house as part of the client’s payroll cycle or through direct wire transfer, which minimizes the default risk.

The contract period for substantially all contracts associated with these revenues is one month due to the fact that both we and the client typically have the unilateral right to terminate a wholly unperformed contract without compensating the other party by providing 30 days’ notice of termination. Our payroll application is the foundation of our solution, and all of our clients are required to utilize this application in order to access our other applications. For clients who purchase multiple applications, due to the short-term nature of our contracts, we do not believe it is meaningful to separately assess and identify whether or not each application potentially represents its own, individual, performance obligation as the revenue generated from each application is recognized within the same month as the revenue from the core payroll application. Similarly, we do not believe it is meaningful to individually determine the standalone selling price for each application. We consider the total price charged to a client in a given period to be indicative of the standalone selling price, as the total amount charged is within a reasonable range of prices typically charged for our goods and services for comparable classes of client groups, which we periodically assess for price adjustments.

Interest income on funds held for clients is earned on funds that are collected from clients in advance of either the applicable due date for payroll tax submissions or the applicable disbursement date for employee payment services. The interest earned on these funds is included in recurring revenues in the consolidated statements of comprehensive income as the collection, holding, and remittance of these funds are essential components of providing these services.

Implementation and Other Revenues

Implementation and other revenues consist of nonrefundable upfront conversion fees, which are charged to new clients to offset the expense of new client set-up as well as revenues from the sale of time clocks as part of our Time and Attendance application. Although these revenues are related to our recurring revenues, they represent distinct performance obligations.

Implementation activities primarily represent administrative activities that allow us to fulfill future performance obligations for our clients and do not represent services transferred to the client. However, the nonrefundable upfront fee charged to our clients results in an implied performance obligation in the form of a material right to the client related to the client’s option to renew at the end of each contract period. Further, given that all other services within the contract are sold at a total price indicative of the standalone selling price, coupled with the fact that the upfront fees are consistent with upfront fees charged in similar contracts that we have with clients, the standalone selling price of the client’s option to renew the contract approximates the dollar amount of the nonrefundable upfront fee. The nonrefundable upfront fee is typically collected upon contract inception and is deferred and recognized ratably over the estimated period of benefit (i.e., 10-year estimated client life).

Revenues from the sale of time clocks are recognized when control is transferred to the client upon delivery of the product. We estimate the standalone selling price for the time clocks by maximizing the use of observable inputs such as our specific pricing practices for time clocks.

Contract Balances

The timing of revenue recognition for recurring services is consistent with the invoicing of clients as they both occur during the respective client payroll period for which the services are provided. Therefore, we generally do not recognize a contract asset or liability resulting from the timing of revenue recognition and invoicing.

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share and per unit amounts)

Changes in deferred revenue for the three and six months ended June 30, 2024 and 2023 were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Balance, beginning of period	$	137,039		$	120,802		$	130,469		$	117,416
Recognition of revenue included in beginning of period balance		(10,321	)		(5,507	)		(16,044	)		(10,593	)
Contract balance, net of revenue recognized during the period		15,642			8,938			27,935			17,410
Balance, end of period	$	142,360		$	124,233		$	142,360		$	124,233

We expect to recognize $17.9 million of deferred revenue related to deferred revenue in the remainder of 2024, $23.8 million in 2025, and $100.7 million thereafter.

Assets Recognized from the Costs to Obtain and Costs to Fulfill Revenue Contracts

We recognize an asset for the incremental costs of obtaining a contract with a client if we expect the amortization period to be longer than one year. We also recognize an asset for the costs to fulfill a contract with a client if such costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered. We have determined that substantially all costs related to implementation activities are administrative in nature and also meet the capitalization criteria under ASC 340-40. These capitalized costs to fulfill principally relate to upfront direct costs that are expected to be recovered through margin and that enhance our ability to satisfy future performance obligations.

The assets related to both costs to obtain, and costs to fulfill, contracts with clients are accounted for utilizing a portfolio approach and are capitalized and amortized ratably over the expected period of benefit, which we have determined to be the estimated life of the client relationship of 10 years. The expected period of benefit has been determined to be the estimated life of the client relationship primarily because we incur no new costs to obtain, or costs to fulfill, a contract upon renewal. Additional commission costs may be incurred when an existing client purchases additional applications; however, these commission costs relate solely to the additional applications purchased and are not related to contract renewal. Furthermore, additional fulfillment costs associated with existing clients purchasing additional applications are minimized by our seamless single-database platform. These assets are presented as deferred contract costs in the accompanying consolidated balance sheets. Amortization expense related to costs to obtain and costs to fulfill a contract is included in sales and marketing expenses and general and administrative expenses in the accompanying consolidated statements of comprehensive income.

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share and per unit amounts)

The following tables present the asset balances and related amortization expense for these contract costs:


	As of and for the three months ended June 30, 2024
	Beginning		Capitalization					Ending
	Balance		of Costs		Amortization			Balance
Costs to obtain a contract	$	396,930	$	15,838	$	(15,808	)	$	396,960
Costs to fulfill a contract	$	440,402	$	35,332	$	(16,010	)	$	459,724

	As of and for the three months ended June 30, 2023
	Beginning		Capitalization					Ending
	Balance		of Costs		Amortization			Balance
Costs to obtain a contract	$	343,991	$	19,937	$	(13,442	)	$	350,486
Costs to fulfill a contract	$	360,588	$	32,514	$	(12,778	)	$	380,324

	As of and for the six months ended June 30, 2024
	Beginning		Capitalization					Ending
	Balance		of Costs		Amortization			Balance
Costs to obtain a contract	$	378,467	$	49,681	$	(31,188	)	$	396,960
Costs to fulfill a contract	$	420,011	$	70,889	$	(31,176	)	$	459,724

	As of and for the six months ended June 30, 2023
	Beginning		Capitalization					Ending
	Balance		of Costs		Amortization			Balance
Costs to obtain a contract	$	325,457	$	51,434	$	(26,405	)	$	350,486
Costs to fulfill a contract	$	338,895	$	66,162	$	(24,733	)	$	380,324

PROPERTY AND EQUIPMENT

Property and equipment and accumulated depreciation and amortization were as follows:


	June 30, 2024			December 31, 2023
Property and equipment
Software and capitalized software development costs	$	432,452		$	371,665
Buildings		259,020			179,874
Computer equipment		186,786			164,856
Rental clocks		45,106			42,364
Furniture, fixtures and equipment		41,353			32,413
Other		19,907			18,500
		984,624			809,672
Less: accumulated depreciation and amortization		(501,813	)		(437,291	)
		482,811			372,381
Construction in progress		15,277			92,020
Land		33,796			33,796
Property and equipment, net	$	531,884		$	498,197

We capitalize software development costs related to software developed or obtained for internal use in accordance with ASC 350-40. For the three and six months ended June 30, 2024, we capitalized $31.2 million and $61.0 million, respectively, of software development costs related to software developed or obtained for internal use. For the three and six months ended June 30, 2023, we capitalized $22.9 million and $44.2 million, respectively, of software development costs related to software developed or obtained for internal use.

Rental clocks included in property and equipment, net in the consolidated balance sheets, represent time clocks issued to clients under month-to-month operating leases. As such, these items are transferred from inventory to property and equipment and depreciated over their estimated useful lives.

Prior to the repayment of our debt on November 21, 2023, we capitalized interest costs incurred for indebtedness related to construction in progress. For the three and six months ended June 30, 2024, we incurred interest costs of $0.8 million and $1.6 million,

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share and per unit amounts)

respectively, none of which was capitalized. For the three and six months ended June 30, 2023, we incurred interest costs of $1.5 million and $2.9 million, respectively, of which we capitalized $0.9 million and $1.4 million, respectively.

Depreciation and amortization expense for property and equipment was $34.6 million and $66.1 million for the three and six months ended June 30, 2024, respectively. Depreciation and amortization expense for property and equipment was $26.8 million and $52.1 million for the three and six months ended June 30, 2023, respectively.

GOODWILL AND INTANGIBLE ASSETS, NET

As of both June 30, 2024 and December 31, 2023, goodwill was $51.9 million. We have selected June 30 as our annual goodwill impairment testing date. We performed a qualitative impairment test of our goodwill and concluded that, as of June 30, 2024, it was more likely than not that the fair value exceeded the carrying value and, therefore, goodwill was not impaired. As of June 30, 2024 and December 31, 2023, there were no indicators of impairment.

In connection with our marketing initiatives, we purchased the naming rights to the downtown Oklahoma City arena that is home to the Oklahoma City Thunder National Basketball Association franchise. Under the terms of the naming rights agreement, we committed to make payments escalating annually from $4.0 million in 2021 to $6.1 million in 2035. We also made a $1.5 million one-time payment in July 2021 to cover sponsorship rights leading up to the 2021-2022 season. Upon the conclusion of the initial term, the agreement may be extended upon the mutual agreement of both parties for an additional five-year period. The cost of the naming rights has been recorded as an intangible asset with an offsetting liability as of the date of the contract. The intangible asset is being amortized over the life of the agreement on a straight-line basis that commenced in June 2021. The difference between the present value of the offsetting liability and actual cash payments is being relieved through sales and marketing expense using the effective interest method over the life of the agreement.

All of our intangible assets other than goodwill are considered to have definite lives and, as such, are subject to amortization. The following tables present the components of intangible assets within our consolidated balance sheets:


	June 30, 2024
	Weighted Average Remaining			Accumulated
	Useful Life	Gross		Amortization			Net
	(Years)
Intangibles:
Naming rights	12.3	$	60,199	$	(12,040	)	$	48,159
Total		$	60,199	$	(12,040	)	$	48,159


	December 31, 2023
	Weighted Average Remaining			Accumulated
	Useful Life	Gross		Amortization			Net
	(Years)
Intangibles:
Naming rights	12.8	$	60,199	$	(10,087	)	$	50,112
Total		$	60,199	$	(10,087	)	$	50,112

Amortization of intangible assets for the three and six months ended June 30, 2024 and 2023 was $1.0 million and $2.0 million, respectively. We estimate the aggregate amortization expense will be $2.0 million for the remainder of 2024 and $3.9 million for each of 2025, 2026, 2027, 2028 and 2029.

LONG-TERM DEBT

On July 29, 2022 (the “Facility Closing Date”), Paycom Payroll, LLC, Software, and certain other subsidiaries of Software (collectively, the “Loan Parties”) entered into a credit agreement (as amended from time to time, the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as a lender, swingline lender and issuing bank, the lenders from time to time party thereto (collectively with JPMorgan Chase Bank, N.A., the “Lenders”), and JPMorgan Chase Bank, N.A., as the administrative agent.

The Credit Agreement initially provided for a senior secured revolving credit facility (the “Revolving Credit Facility”) in the aggregate principal amount of up to $650.0 million, and the ability to request an incremental facility of up to an additional $500.0 million, subject to obtaining additional lender commitments and certain approvals and satisfying certain other conditions. The Credit

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share and per unit amounts)

Agreement includes a $25.0 million sublimit for swingline loans and a $6.5 million sublimit for letters of credit. The Credit Agreement also initially provided for a senior secured delayed draw term loan (the “Term Loan Facility”) in the aggregate amount of up to $750.0 million. All loans under the Credit Agreement will mature on July 29, 2027 (the “Scheduled Maturity Date”). Unamortized debt issuance costs of $3.4 million as of June 30, 2024 are included in other assets on our consolidated balance sheets.

On the Facility Closing Date, we borrowed $29.0 million under the Revolving Credit Facility to repay the outstanding indebtedness under our prior credit facility, along with accrued interest, expenses and fees. The loan bore interest at the Adjusted Term SOFR Rate (as defined below) for the interest period in effect plus 1.25%.

On July 28, 2023, the Loan Parties entered into Amendment No. 2 to Credit Agreement with the Lenders, pursuant to which, among other things, (i) the aggregate revolving commitments under the Revolving Credit Facility were increased from $650.0 million to $1.0 billion, (ii) the Term Loan Facility was terminated and (iii) the Credit Agreement was amended in contemplation of the formation and future operating activities of the Paycom Client Trust (the “Client Trust”) and Paycom National Trust Bank, NA (the “Trust Bank”). The Company intends to form the Client Trust to hold client payroll and related funds and the Trust Bank to serve as trustee of the Client Trust. We did not make any draws under the Term Loan Facility prior to its termination on July 28, 2023. At the time of termination, unamortized debt issuance costs totaling $1.2 million were written off and recognized as a loss on extinguishment of debt, which was included in other income, net in the consolidated statements of comprehensive income.

On November 21, 2023, we fully repaid the outstanding indebtedness under the Revolving Credit Facility. As of June 30, 2024, there was no debt outstanding under the Revolving Credit Facility.

Borrowings under the Credit Agreement bear interest at a rate per annum equal to (i) the Alternate Base Rate (“ABR”) plus an applicable margin (“ABR Loans”) or (ii) (x) the term Secured Overnight Financing Rate (“SOFR”) plus 0.10% (the “Adjusted Term SOFR Rate”) or (y) the daily SOFR plus 0.10%, in each case plus an applicable margin (“SOFR Rate Loans”). ABR is calculated as the highest of (i) the rate of interest last quoted by The Wall Street Journal in the United States as the prime rate in effect, (ii) the federal funds rate plus 0.5% and (iii) the Adjusted Term SOFR Rate for a one-month interest period plus 1.00%; provided that, if the ABR as determined pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to be 1.00%. The applicable margin for ABR Loans is (i) 0.25% if the Company’s consolidated leverage ratio is less than 1.0 to 1.0; (ii) 0.50% if the Company’s consolidated leverage ratio is greater than or equal to 1.0 to 1.0 but less than 2.0 to 1.0; (iii) 0.75% if the Company’s consolidated leverage ratio is greater than or equal to 2.0 to 1.0 but less than 3.0 to 1.0; or (iv) 1.00% if the Company’s consolidated leverage ratio is greater than or equal to 3.0 to 1.0. The applicable margin for SOFR Rate Loans is (i) 1.25% if the Company’s consolidated leverage ratio is less than 1.0 to 1.0; (ii) 1.5% if the Company’s consolidated leverage ratio is greater than or equal to 1.0 to 1.0 but less than 2.0 to 1.0; (iii) 1.75% if the Company’s consolidated leverage ratio is greater than or equal to 2.0 to 1.0 but less than 3.0 to 1.0; or (iv) 2.00% if the Company’s consolidated leverage ratio is greater than or equal to 3.0 to 1.0. Subject to certain conditions set forth in the Credit Agreement, we may borrow, prepay and reborrow under the Revolving Credit Facility and terminate or reduce the Lenders’ commitments at any time prior to the Scheduled Maturity Date. We are required to pay a quarterly commitment fee on the daily amount of the undrawn portion of the revolving commitments under the Revolving Credit Facility at a rate per annum of (i) 0.20% if the Company’s consolidated leverage ratio is less than 1.0 to 1.0; (ii) 0.225% if the Company’s consolidated leverage ratio is greater than or equal to 1.0 to 1.0 but less than 2.0 to 1.0; (iii) 0.25% if the Company’s consolidated leverage ratio is greater than or equal to 2.0 to 1.0 but less than 3.0 to 1.0; or (iv) 0.275% if the Company’s consolidated leverage ratio is greater than or equal to 3.0 to 1.0.

Under the Credit Agreement, we are required to maintain as of the end of each fiscal quarter a consolidated interest coverage ratio of not less than 3.0 to 1.0 and a consolidated leverage ratio of not greater than 3.5 to 1.0, stepping down to 3.25 to 1.0 as of December 31, 2024 and 3.0 to 1.0 as of December 31, 2025, and thereafter. Additionally, the Credit Agreement contains customary affirmative and negative covenants, including covenants limiting our ability to, among other things, grant liens, incur debt, effect certain mergers, make investments, dispose of assets, enter into certain transactions, including swap agreements and sale and leaseback transactions, pay dividends or distributions on our capital stock, and enter into transactions with affiliates, in each case subject to customary exceptions. As of June 30, 2024, we were in compliance with these covenants. Our obligations under the Credit Agreement are secured by a senior security interest in all personal property of the Loan Parties.

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share and per unit amounts)

CORPORATE INVESTMENTS AND FUNDS HELD FOR CLIENTS

The tables below present our cash and cash equivalents, the funds held for clients cash and cash equivalents as well as the investments that were included within funds held for clients on the consolidated balance sheets:


	June 30, 2024
Type of issue	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
Cash and cash equivalents	$	346,456	$	—	$	—		$	346,456
Funds held for clients cash and cash equivalents		2,268,265		—		—			2,268,265
Available-for-sale securities(1):
U.S. treasury securities		34,995		—		(101	)		34,894
Total investments	$	2,649,716	$	—	$	(101	)	$	2,649,615

	December 31, 2023
Type of issue	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
Cash and cash equivalents	$	294,025	$	—	$	—		$	294,025
Funds held for clients cash and cash equivalents		2,128,735		—		—			2,128,735
Available-for-sale securities(1):
Certificates of deposit		25,000		—		—			25,000
U.S. treasury securities		174,887		—		(1,256	)		173,631
Total investments	$	2,622,647	$	—	$	(1,256	)	$	2,621,391

(1)

All available-for-sale securities were included within the funds held for clients.

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of June 30, 2024, are as follows:


	June 30, 2024
	Securities in unrealized loss position for less than 12 months				Securities in unrealized loss position for greater than 12 months					Total
Type of issue	Gross unrealized losses		Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value
U.S. treasury securities	$	—	$	—	$	(101	)	$	34,894	$	(101	)	$	34,894
Total	$	—	$	—	$	(101	)	$	34,894	$	(101	)	$	34,894

The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2023, are as follows:


	December 31, 2023
	Securities in unrealized loss position for less than 12 months				Securities in unrealized loss position for greater than 12 months					Total
Type of issue	Gross unrealized losses		Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value
U.S. treasury securities	$	—	$	—	$	(1,256	)	$	173,631	$	(1,256	)	$	173,631
Total	$	—	$	—	$	(1,256	)	$	173,631	$	(1,256	)	$	173,631

We did not make any reclassification adjustments out of accumulated other comprehensive income for realized gains or losses on the sale or maturity of available-for-sale securities for the six months ended June 30, 2024 or 2023. There were no realized gains or losses on the sale of available-for-sale securities for the six months ended June 30, 2024 or 2023.

We regularly review the composition of our investment portfolio and did not recognize any credit impairment losses during the six months ended June 30, 2024 or 2023. The Company believes it is probable that the principal and interest will be collected in accordance with contractual terms and that the unrealized losses on these securities were due to changes in interest rates and were not due to increased credit risk. The U.S. treasury securities held a rating of AA+ as of June 30, 2024.

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share and per unit amounts)

Expected maturities of available-for-sale securities at June 30, 2024 are as follows:


Expected maturity	Amortized cost		Fair value
One year or less	$	34,995	$	34,894

FAIR VALUE OF FINANCIAL INSTRUMENTS

Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, funds held for clients, client funds obligation and long-term debt. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable, funds held for clients and client funds obligation approximates fair value.

Our corporate investments consist primarily of money market funds and demand deposit accounts and are classified as cash and cash equivalents on the consolidated balance sheets.

As discussed in Note 2, we typically invest the funds held for clients in money market funds, demand deposit accounts, certificates of deposit, commercial paper and U.S. treasury securities. Short-term investments in instruments with an original maturity of less than three months are classified as cash and cash equivalents within funds held for clients in the consolidated balance sheets. Investments in instruments with an original maturity greater than three months are classified as available-for-sale securities and are also included within funds held for clients in the consolidated balance sheets. These available-for-sale securities are recognized at fair value, with the difference between the amortized cost and fair value of these available-for-sale securities recorded as unrealized net gains (losses) within comprehensive earnings (loss) in our consolidated statements of comprehensive income. See Note 7 for additional information.

The accounting standard for fair value measurements establishes a three-level fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

•

Level 1 – Observable inputs such as quoted prices in active markets

•

Level 2 – Inputs other than quoted prices in active markets for identical assets or liabilities that are observable either directly or indirectly or quoted prices that are not active

•

Level 3 – Unobservable inputs in which there is little or no market data

Included in the following tables are the Company’s major categories of assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:


	June 30, 2024
	Level 1		Level 2		Level 3		Total
Assets:
U.S. treasury securities	$	—	$	34,894	$	—	$	34,894


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Certificates of deposit	$	—	$	25,000	$	—	$	25,000
U.S. treasury securities	$	—	$	173,631	$	—	$	173,631

EMPLOYEE SAVINGS PLAN AND EMPLOYEE STOCK PURCHASE PLAN

Employees over the age of 18 who have completed 30 days of service are eligible to participate in our employee savings plan (401(k) plan). We have made a Qualified Automatic Contribution Arrangement (“QACA”) election, whereby the Company matches the contribution of our employees equal to 100% of the first 1% of salary deferrals and 50% of salary deferrals between 2% and 6%, up to a maximum matching contribution of 3.5% of an employee’s salary each plan year. We are allowed to make additional discretionary matching contributions and discretionary profit sharing contributions. Employees are 100% vested in amounts attributable to salary deferrals and rollover contributions. The QACA matching contributions as well as the discretionary matching and profit sharing contributions vest 100% after two years of employment from the date of hire. Matching contributions were $5.4 million and $10.0 million for the three and six months ended June 30, 2024, respectively. Matching contributions were $3.8 million and $7.8 million for the three and six months ended June 30, 2023, respectively.

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share and per unit amounts)

The Paycom Software, Inc. Employee Stock Purchase Plan (the “ESPP”) has overlapping offering periods, with each offering period lasting approximately 24 months. At the beginning of each offering period, eligible employees may elect to contribute, through payroll deductions, up to 10% of their compensation, subject to an annual per-employee maximum of $25,000. Eligible employees purchase shares of the Company’s common stock at a price equal to 85% of the fair market value of the shares on the exercise date. The maximum number of shares that may be purchased by a participant during each offering period is 2,000 shares, subject to limits specified by the Internal Revenue Service. The shares reserved for purposes of the ESPP are shares we purchase in the open market. The maximum aggregate number of shares of the Company’s common stock that may be purchased by all participants under the ESPP is 2.0 million shares. Eligible employees purchased 50,325 shares and 35,628 shares of the Company’s common stock under the ESPP during the six months ended June 30, 2024 and 2023, respectively. Compensation expense related to the ESPP is recognized on a straight-line basis over the requisite service period. Our compensation expense related to the ESPP was $0.8 million and $1.7 million for the three and six months ended June 30, 2024, respectively. Our compensation expense related to the ESPP was $0.9 million and $1.8 million for the three and six months ended June 30, 2023, respectively.

10.

EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed in a similar manner to basic earnings per share after assuming the issuance of shares of common stock for all potentially dilutive equity incentive awards.

The following is a reconciliation of net income and the shares of common stock used in the computation of basic and diluted earnings per share:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Numerator:
Net income	$	67,970	$	64,516	$	315,157	$	183,812
Denominator:
Basic weighted average shares outstanding		56,451		57,920		56,499		57,895
Dilutive effect of unvested restricted stock and restricted stock units		320		113		49		155
Diluted weighted average shares outstanding		56,771		58,033		56,548		58,050
Earnings per share:
Basic	$	1.20	$	1.11	$	5.58	$	3.17
Diluted	$	1.20	$	1.11	$	5.57	$	3.17

11.

STOCK-BASED COMPENSATION

The Company recognizes stock-based compensation expense related to awards of (i) restricted stock subject to time-based or no vesting conditions (“Time-Based Restricted Stock Awards”), (ii) restricted stock subject to market-based vesting conditions (“Market-Based Restricted Stock Awards”), (iii) restricted stock units subject to time-based vesting conditions (“RSUs”) and (iv) restricted stock units subject to performance-based vesting conditions (“PSUs”). During the six months ended June 30, 2024, awards were granted to executive officers, non-executive employees, non-employee directors and contractors pursuant to the Paycom Software, Inc. 2023 Long-Term Incentive Plan.

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share and per unit amounts)

The following table summarizes restricted stock awards activity for the six months ended June 30, 2024:



	Time-Based Restricted Stock Awards					Market-Based Restricted Stock Awards
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Unvested shares of restricted stock outstanding at December 31, 2023		904.0		$	293.74		1,745.5		$	124.38
Granted		626.9		$	181.09		187.2		$	164.29
Vested		(204.7	)	$	297.12		—		$	—
Forfeited		(119.8	)	$	280.15		(1,633.3	)(1)	$	111.03
Unvested shares of restricted stock outstanding at June 30, 2024		1,206.4		$	235.98		299.4		$	222.18

(1)

The change in Mr. Richison’s position from Chief Executive Officer to Co-Chief Executive Officer, effective February 7, 2024, triggered the forfeiture of 1,610,000 shares of restricted stock granted to him on November 23, 2020, in accordance with the terms of the award. As a result, $117.5 million of previously recognized compensation costs that were recorded in reporting periods prior to 2024 were reversed to additional paid-in capital in the consolidated balance sheets and to general and administrative expenses in the consolidated statements of comprehensive income.

The following table summarizes PSU and RSU activity for the six months ended June 30, 2024:


	RSUs					PSUs
	Units			Weighted Average Grant Date Fair Value Per Unit		Units			Weighted Average Grant Date Fair Value Per Unit
Unvested restricted stock units outstanding at December 31, 2023		9.2		$	300.74		37.2		$	308.05
Granted		48.7		$	187.02		50.5		$	187.34
Vested		(2.9	)	$	297.55		(4.5	)	$	288.77
Forfeited		(31.2	)	$	200.62		(33.0	)	$	215.12
Unvested restricted stock units outstanding at June 30, 2024(1)		23.8		$	199.58		50.2		$	249.52

(1)

A maximum of 89,913 shares could be delivered upon settlement of PSUs based upon the Company’s achievement of the applicable performance goals over the applicable performance periods.

For the six months ended June 30, 2024, the Company recognized non-cash stock-based compensation expense, inclusive of forfeitures, that totaled a net benefit of $69.7 million. For the six months ended June 30, 2023, our total non-cash stock-based compensation expense was $63.2 million.

The following table presents the non-cash stock-based compensation expense that is included within the specified line items in our consolidated statements of comprehensive income:


	Six Months Ended June 30,
	2024			2023
Non-cash stock-based compensation expense:
Operating expenses	$	7,154		$	5,738
Sales and marketing		10,296			11,516
Research and development		13,145			11,897
General and administrative		(100,265	)		34,034
Total non-cash stock-based compensation expense	$	(69,670	)	$	63,185

Paycom Software, Inc.

Notes to the Unaudited Consolidated Financial Statements

(tabular dollars and shares in thousands, except per share and per unit amounts)

The following table presents the unrecognized compensation cost and the related weighted average recognition period associated with unvested restricted stock awards and unvested restricted stock unit awards (including RSUs and PSUs) as of June 30, 2024.


	Restricted Stock		Restricted Stock
	Awards		Units
Unrecognized compensation cost	$	253,523	$	9,670
Weighted average period for recognition (years)		2.7		1.2

We capitalized stock-based compensation costs related to software developed for internal use of $5.2 million and $8.8 million for the three and six months ended June 30, 2024, respectively. We capitalized stock-based compensation costs related to software developed for internal use of $4.2 million and $7.8 million for the three and six months ended June 30, 2023, respectively.

In May 2023, our Board of Directors adopted a dividend policy under which we intend to pay quarterly cash dividends on our common stock. All unvested shares of restricted stock, RSUs and PSUs currently outstanding are entitled to receive dividends or dividend equivalents, provided that such dividends or dividend equivalents are withheld by the Company and distributed to the applicable holder upon the release of restrictions on such shares of restricted stock, RSUs or PSUs (i.e., upon vesting).

12.

COMMITMENTS AND CONTINGENCIES

We are involved in various legal proceedings in the ordinary course of business. Although we cannot predict the outcome of these proceedings, legal matters are subject to inherent uncertainties, and there exists the possibility that the ultimate resolution of these matters could have a material adverse effect on our business, financial condition, results of operations and cash flows.

13.

INCOME TAXES

The Company’s effective income tax rate was 19.0% and 28.9% for the six months ended June 30, 2024 and 2023, respectively. The lower effective tax rate for the six months ended June 30, 2024 was primarily attributable to the tax benefit related to the forfeiture of the 2020 CEO Performance Award in February 2024.

14.

SUBSEQUENT EVENTS

On July 29, 2024, our Board of Directors increased and extended the stock repurchase plan, such that $1.5 billion is available for repurchases between July 29, 2024 and August 15, 2026.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with management’s perspective on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (i) the accompanying unaudited consolidated financial statements and notes thereto for the three and six months ended June 30, 2024, (ii) the audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in our Annual Report on Form 10-K (the “Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on February 15, 2024 and (iii) the discussion under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K. Except for certain information as of December 31, 2023, all amounts herein are unaudited. Unless we state otherwise or the context otherwise requires, the terms “we,” “us,” “our” and the “Company” refer to Paycom Software, Inc. and its consolidated subsidiaries. All amounts presented in tables, other than per share amounts, are in thousands unless otherwise noted.

Special Note Regarding Forward-Looking Statements

The following discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are any statements that refer to our estimated or anticipated results, other non-historical facts or future events and include, but are not limited to, statements regarding our business strategy; anticipated future operating results and operating expenses, cash flows, capital resources, dividends and liquidity; competition; trends, opportunities and risks affecting our business, industry and financial results; future expansion or growth plans and potential for future growth, including internationally; our ability to attract new clients to purchase our solution; our ability to retain clients and induce them to purchase additional applications; our ability to accurately forecast future revenues and appropriately plan our expenses; market acceptance of our solution and applications; our expectations regarding future revenues generated by certain applications; the return on investment for users of our solution; our ability to attract and retain qualified employees and key personnel; future regulatory, judicial and legislative changes; how certain factors affecting our performance correlate to improvement or deterioration in the labor market; our plan to open additional sales offices and our ability to effectively execute such plan; the sufficiency of our existing cash and cash equivalents to meet our working capital and capital expenditure needs over the next 12 months; our plans regarding our capital expenditures and investment activity as our business grows, including with respect to research and development and the expansion of our facilities; our plans to pay cash dividends; and our plans to repurchase shares of our common stock through a stock repurchase plan. In addition, forward-looking statements also consist of statements involving trend analyses and statements including such words as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “should,” “will,” “would,” and similar expressions or the negative of such terms or other comparable terminology.

Forward-looking statements are neither historical facts nor assurances of future performance, and are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

•

the possibility of security vulnerabilities, cyber-attacks and network disruptions, including breaches of data security and privacy leaks, data loss, and business interruptions;

•

changes in laws, government regulations and policies and interpretations thereof;

•

our compliance with data privacy laws and regulations;

•

our ability to develop enhancements and new applications, keep pace with technological developments and respond to future disruptive technologies;

•

our ability to compete effectively;

•

our ability to maintain and expand existing client relationships and add new clients, including challenges related to attracting and retaining larger clients;

•

the possibility that clients may not be satisfied with our deployment or technical support services, or that our solution fails to perform properly;

•

our dependence on our key executives;

•

our ability to attract and retain qualified personnel, including software developers, product managers and skilled IT, sales, marketing and operational personnel;

•

our ability to manage our rapid growth and organizational change effectively;

•

the impact of adverse economic and market conditions, including those related to global health crises and geopolitical conflicts;

•

fluctuations in our financial results due to factors beyond our control;

•

our failure to develop and maintain our brand cost-effectively;

•

our ability to expand into international markets and manage risks associated with international operations and sales;

•

our reliance on relationships with third parties;

•

regulatory and compliance risks related to our background checks business;

•

our failure to adequately protect our intellectual property rights;

•

seasonality of certain operating results and financial metrics;

•

the possibility that the Affordable Care Act may be modified, repealed or declared unconstitutional; and

•

the other factors set forth in Part I, Item 1A, “Risk Factors” of the Form 10-K and our other reports filed with the SEC.

Forward-looking statements are based only on information currently available to us and speak only as of the date of this Form 10-Q. We do not undertake any obligation to update or revise the forward-looking statements to reflect events that occur or circumstances that exist after the date on which such statements were made, except to the extent required by law.

Overview

We are a leading provider of a comprehensive, cloud-based human capital management (“HCM”) solution delivered as Software-as-a-Service. We provide functionality and data analytics that businesses need to manage the complete employment lifecycle, from recruitment to retirement. Our solution requires virtually no customization and is based on a core system of record maintained in a single database for all HCM functions, including payroll, talent acquisition, talent management, human resources management and time and labor management applications. Our user-friendly software allows for easy adoption of our solution by employees, enabling self-management of their HCM activities in the cloud, which reduces the administrative burden on employers and increases employee productivity.

We generate revenues from (i) fixed amounts charged per billing period plus a fee per employee or transaction processed and (ii) fixed amounts charged per billing period. Our billing period varies by client based on when each client pays its employees, which may be weekly, bi-weekly, semi-monthly or monthly. We serve a diverse client base in terms of size and industry. None of our clients constituted more than one-half of one percent of our revenues for the six months ended June 30, 2024. Our revenues are primarily generated through our sales force that solicits new clients and our client relations representatives who sell new applications to existing clients.

Our continued growth depends on attracting new clients through further penetration of our existing markets and geographic expansion into new markets, targeting a high degree of client employee usage across our solution, and introducing new applications to our existing client base. We believe our ability to continue to develop new applications and to improve existing applications will enable us to increase revenues in the future, and the number of our new applications adopted by our clients has been a significant factor in our revenue growth. We plan to open additional sales offices in the future to further expand our market presence.

Our principal marketing efforts include national and local advertising campaigns, email campaigns, social and digital media campaigns, search engine marketing methods, sponsorships, tradeshows, print advertising and outbound marketing including personalized direct mail campaigns. In addition, we generate leads and build recognition of our brand and thought leadership with relevant and informative content, such as white papers, blogs, podcast episodes and webinars.

Throughout our history, we have built strong relationships with our clients. As the HCM needs of our clients evolve, we believe that we are well-positioned to expand the HCM spending of our clients, and we believe this opportunity is significant. To be successful, we must continue to demonstrate the operational and economic benefits of our solution, as well as effectively hire, train, motivate and retain qualified personnel.

Growth Outlook, Opportunities and Challenges

As a result of our significant revenue growth and geographic expansion, we are presented with a variety of opportunities and challenges. Our payroll application is the foundation of our solution, and all of our clients are required to utilize this application in order to access our other applications. Consequently, we have historically generated the majority of our revenues from our payroll applications, although our revenue mix has evolved and will continue to evolve as we develop and add new non-payroll applications to our solution. We believe our strategy of focusing on automation and employee usage is an important differentiator for attracting new clients and is also key to long-term client satisfaction and client retention. For example, our industry-first Beti technology automates and streamlines the payroll process by empowering employees to do their own payroll. Client adoption of new applications and, historically, client employee usage of both new and existing applications have been significant factors in our revenue growth. Nonetheless, because Beti is designed to eliminate payroll errors that lead to billable corrections and unscheduled payroll runs, we have experienced a reduction in these activities that would otherwise generate additional revenue for us.

In order to increase revenues and continue to improve our operating results, we must also attract new clients. We intend to obtain new clients by continuing to leverage our sales force productivity, further penetrating markets where we currently have existing sales offices, and expanding into new markets.

The market for HCM software is highly competitive, rapidly evolving and fragmented, and we expect competition to continue to intensify as new market entrants and disruptive technologies emerge and increasingly aggressive pricing and client retention strategies persist.

Historically, our target client size range has been organizations with 50 to 10,000 employees. In 2023, we expanded our target client size range to include organizations with more than 10,000 employees. While we continue to serve a diversified client base ranging in size from one employee to many thousands of employees, the average size of our clients has grown significantly as we have organically grown our operations and increased the number of applications we offer. Furthermore, with the launch of our Global HCM solution and expansion of payroll services into certain international markets, we expect that our ability to serve organizations with international employees makes our solution more attractive to larger companies, many of which have a global presence. We believe larger employers represent a substantial opportunity to increase our revenues per client, with limited incremental cost to us. Because we charge our clients on a per employee basis for certain services we provide, any increase or decrease in the number of employees of our clients will have a positive or negative impact, respectively, on our results of operations. A multitude of macroeconomic pressures, such as inflation and rising interest rates, impact our clients’ hiring practices to varying degrees and, in turn, impact our revenues. Generally, we expect that changes in certain factors affecting our performance will correlate with improvement or deterioration in the labor market. For example, the performance of our pre-employment services offerings is sensitive to changes in hiring trends, and we believe it will reflect any slowdown in hiring among U.S. employers.

We collect funds from clients in advance of either the applicable due date for payroll tax submissions or the applicable disbursement date for employee payment services. Those collections from clients are typically disbursed from one to 30 days after receipt, with some funds being held for up to 120 days. We typically invest funds held for clients in money market funds, demand deposit accounts, U.S. treasury securities, certificates of deposit and commercial paper until they are paid to the applicable tax or regulatory agencies or to client employees. As we introduce new applications, expand our client base and renew and expand relationships with existing clients, we expect our average funds held for clients balance and, accordingly, interest earned on funds held for clients, will increase; however, the amount of interest we earn can be positively or negatively impacted by changes in interest rates.

Growing our business has resulted in, and will continue to result in, substantial investments in sales professionals, operating expenses, system development and programming costs and general and administrative expenses, which have increased and will continue to increase our expenses. Specifically, our revenue growth and geographic expansion drive increases in our employee headcount, which in turn precipitates increases in (i) salaries and benefits, (ii) stock-based compensation expense and (iii) facility costs related to the expansion of our corporate headquarters and operations facilities and additional sales office leases. Furthermore, execution of our international expansion strategy requires considerable investment. As a result of the factors described above, we have experienced and expect to continue to experience pressure on our margins as we hire to support growth.

We believe the challenges of managing the ever-changing complexity of payroll and human resources will continue to drive companies to turn to outsourced providers for help with their HCM needs. The HCM industry historically has been driven, in part, by legislation and regulatory action, including COBRA, changes to the minimum wage laws or overtime rules, and legislation from federal, state or municipal taxation authorities.

Results of Operations

The following table sets forth certain consolidated statements of comprehensive income data and such data as a percentage of total revenues for the periods presented:


	Three Months Ended June 30,											Six Months Ended June 30,
	2024					2023					% Change	2024					2023					% Change
Revenues
Recurring	$	430,400		98.4	%	$	394,522		98.4	%	9.1%	$	922,296		98.4	%	$	838,943		98.4	%	9.9%
Implementation and other		7,112		1.6	%		6,617		1.6	%	7.5%		15,097		1.6	%		13,833		1.6	%	9.1%
Total revenues		437,512		100.0	%		401,139		100.0	%	9.1%		937,393		100.0	%		852,776		100.0	%	9.9%
Cost of revenues
Operating expenses		67,451		15.4	%		54,617		13.6	%	23.5%		131,121		14.0	%		107,702		12.6	%	21.7%
Depreciation and amortization		16,433		3.8	%		12,811		3.2	%	28.3%		31,394		3.3	%		24,958		3.0	%	25.8%
Total cost of revenues		83,884		19.2	%		67,428		16.8	%	24.4%		162,515		17.3	%		132,660		15.6	%	22.5%
Administrative expenses
Sales and marketing		106,864		24.4	%		106,435		26.5	%	0.4%		222,388		23.7	%		210,009		24.6	%	5.9%
Research and development		62,371		14.3	%		49,118		12.2	%	27.0%		112,880		12.0	%		91,787		10.8	%	23.0%
General and administrative		70,072		16.0	%		75,965		18.9	%	-7.8%		21,968		2.3	%		141,570		16.6	%	-84.5%
Depreciation and amortization		19,181		4.4	%		14,927		3.8	%	28.5%		36,688		4.0	%		29,052		3.4	%	26.3%
Total administrative expenses		258,488		59.1	%		246,445		61.4	%	4.9%		393,924		42.0	%		472,418		55.4	%	-16.6%
Total operating expenses		342,372		78.3	%		313,873		78.2	%	9.1%		556,439		59.4	%		605,078		71.0	%	-8.0%
Operating income		95,140		21.7	%		87,266		21.8	%	9.0%		380,954		40.7	%		247,698		29.0	%	53.8%
Interest expense		(782	)	-0.2	%		(602	)	-0.2	%	29.9%		(1,564	)	-0.2	%		(1,439	)	-0.2	%	8.7%
Other income (expense), net		4,787		1.1	%		6,183		1.5	%	-22.6%		9,796		1.0	%		12,187		1.5	%	-19.6%
Income before income taxes		99,145		22.6	%		92,847		23.1	%	6.8%		389,186		41.5	%		258,446		30.3	%	50.6%
Provision for income taxes		31,175		7.1	%		28,331		7.0	%	10.0%		74,029		7.9	%		74,634		8.7	%	-0.8%
Net income	$	67,970		15.5	%	$	64,516		16.1	%	5.4%	$	315,157		33.6	%	$	183,812		21.6	%	71.5%

Revenues

The increase in recurring revenues for the three and six months ended June 30, 2024 compared to the same periods in 2023 was primarily the result of the addition of new clients in our target market range, increased revenue per client, the realization of pricing strategies and the impact of new product and service offerings. We believe that a decrease in the sale of additional applications to existing clients adversely affected the magnitude of the period-over-period increase in revenues. Increased interest rates and a higher average funds held for clients balance during the three and six months ended June 30, 2024 as compared to the same periods in 2023, resulted in increased interest earned on funds held for clients, which had a positive impact on recurring revenue. The average daily balance of funds held for clients was $2.5 billion and $2.3 billion for the six months ended June 30, 2024 and 2023, respectively.

The increase in implementation and other revenues for the three and six months ended June 30, 2024 compared to the same periods in 2023 was primarily the result of the increased non-refundable upfront conversion fees collected from the addition of new clients. These fees are deferred and recognized ratably over the 10-year estimated life of our clients.

Expenses

Cost of Revenues

During the three months ended June 30, 2024, operating expenses increased from the comparable prior year period by $12.8 million, primarily due to a $8.6 million increase in employee-related expenses attributable to growth in the number of operating personnel, a $1.6 million increase in shipping and supplies fees and a $1.2 million increase in automated clearing house fees related to increased revenues. Depreciation and amortization expense increased $3.6 million from the comparable prior year period, primarily due to the development of additional technology, purchases of other related fixed assets, and the impact of our corporate headquarters expansion that was placed into service in April 2024.

During the six months ended June 30, 2024, operating expenses increased from the comparable prior year period by $23.4 million, primarily due to a $16.7 million increase in employee-related expenses attributable to growth in the number of operating

personnel, a $2.6 million increase in automated clearing house fees and a $2.5 million increase in shipping and supplies fees related to increased revenues. Depreciation and amortization expense increased $6.4 million from the comparable prior year period, primarily due to the development of additional technology, purchases of other related fixed assets, and the impact of our corporate headquarters expansion that was not in service in the prior year period.

Administrative Expenses

Sales and Marketing

During the three months ended June 30, 2024, sales and marketing expenses increased from the comparable prior year period by $0.4 million due to a $9.6 million increase in employee-related expenses, including commissions and bonuses, which was partially offset by a $9.2 million decrease in marketing and advertising expense.

During the six months ended June 30, 2024, sales and marketing expenses increased from the comparable prior year period by $12.4 million due to a $18.4 million increase in employee-related expenses, including commissions and bonuses, which was partially offset by a $6.0 million decrease in marketing and advertising expense.

Research and Development

During the three and six months ended June 30, 2024, research and development expenses increased from the comparable prior year periods due to increases in employee-related expenses of $13.3 million and $21.1 million, respectively.

As we continue the ongoing development of our platform and product offerings, we generally expect research and development expenses (exclusive of stock-based compensation) to continue to increase, particularly as we hire more personnel to support our growth. While we expect this trend to continue on an absolute dollar basis and as a percentage of total revenues, we also anticipate the rate of increase to decline over time as we leverage our growth and realize additional economies of scale. As is customary for our business, we also expect fluctuations in research and development expense as a percentage of revenue on a quarter-to-quarter basis due to seasonal revenue trends, the introduction of new products, the amount and timing of research and development costs that may be capitalized and the timing of onboarding new hires and restricted stock vesting events.

Expenditures for software developed or obtained for internal use are capitalized and amortized over a three-year period on a straight-line basis. The nature of the development projects underway during a particular period directly impacts the timing and extent of these capitalized expenditures and can affect the amount of research and development expenses in such period. The table below sets forth the amounts of capitalized and expensed research and development costs for the three and six months ended June 30, 2024 and 2023:


	Three Months Ended June 30,					Six Months Ended June 30,
	2024		2023		% Change	2024		2023		% Change
Capitalized portion of research and development	$	31,186	$	22,878	36%	$	61,032	$	44,231	38%
Expensed portion of research and development		62,371		49,118	27%		112,880		91,787	23%
Total research and development costs	$	93,557	$	71,996	30%	$	173,912	$	136,018	28%

General and Administrative

During the three months ended June 30, 2024, general and administrative expenses decreased $5.9 million from the comparable prior year period due to a decrease in employee-related expenses of $3.4 million and a $2.5 million decrease in accounting and legal expenses.

During the six months ended June 30, 2024, general and administrative expenses decreased $119.6 million from the comparable prior year period due to a $117.5 million reversal of previously recognized stock-based compensation expense related to the forfeiture of a restricted stock award (the “2020 CEO Performance Award”) upon Chad Richison’s transition to Co-Chief Executive Officer and a $1.7 million decrease in accounting and legal expenses, which was partially offset by a $0.4 million increase in other employee-related expenses.

Non-Cash Stock-Based Compensation Expense

The following table presents the non-cash stock-based compensation expense that is included within the specified line items in our consolidated statements of comprehensive income:


	Three Months Ended June 30,					Six Months Ended June 30,
	2024		2023		% Change	2024			2023		% Change
Operating expenses	$	4,163	$	3,353	24%	$	7,154		$	5,738	25%
Sales and marketing		4,802		6,040	-20%		10,296			11,516	-11%
Research and development		7,775		6,639	17%		13,145			11,897	10%
General and administrative		7,380		19,334	-62%		(100,265	)		34,034	-395%
Total non-cash stock-based compensation expense	$	24,120	$	35,366	-32%	$	(69,670	)	$	63,185	-210%

Depreciation and Amortization

During the three and six months ended June 30, 2024, depreciation and amortization expense increased from the comparable prior year periods primarily due to the development of additional technology, purchases of other related fixed assets, and the impact of our corporate headquarters expansion that was placed into service in April 2024.

Interest Expense

The increases in interest expense for the three and six months ended June 30, 2024, as compared to the prior year periods, were primarily due to the timing of our expansion project at our corporate headquarters, which resulted in a higher capitalization rate of interest in the comparable prior year periods.

Other Income (Expense), net

The decreases in other income (expense), net for the three and six months ended June 30, 2024, as compared to the prior year periods, were primarily attributable to decreases in interest earned on our corporate funds due to lower cash balances. For the three and six months ended June 30, 2024, we earned interest on our corporate funds of $4.8 million and $9.0 million, respectively. For the three and six months ended June 30, 2023, we earned interest on our corporate funds of $6.2 million and $11.4 million, respectively.

Provision for Income Taxes

The provision for income taxes is based on a current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items. Our effective income tax rate was 19.0% and 28.9% for the six months ended June 30, 2024 and 2023, respectively. The lower effective tax rate for the six months ended June 30, 2024 was primarily attributable to the tax benefit related to the forfeiture of the 2020 CEO Performance Award in February 2024.

Liquidity and Capital Resources

Our principal sources of capital and liquidity are our operating cash flow and cash and cash equivalents. Our cash and cash equivalents consist primarily of demand deposit accounts and money market funds. Additionally, we maintain a $1.0 billion senior secured revolving credit facility (the “Revolving Credit Facility”), which can be accessed as needed to supplement our operating cash flow and cash balances. As of June 30, 2024, we did not have any outstanding borrowings under the Revolving Credit Facility.

We have historically funded our operations from cash flows generated from operations, cash from the sale of equity securities and debt financing. We are funding our ongoing capital expenditures from available cash. Further, to date, all cash dividends and purchases under our stock repurchase plan have been funded from available cash. We believe our existing cash and cash equivalents, cash generated from operations and available sources of liquidity will be sufficient to maintain operations, make necessary capital expenditures, pay dividends and opportunistically repurchase shares for at least the next 12 months. In addition, based on our strong profitability and continued growth, we expect to meet our longer-term liquidity needs with cash flows from operations and, as needed, financing arrangements.

Credit Agreement. On July 29, 2022, we entered into a credit agreement (as amended from time to time, the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as a lender, swingline lender and issuing bank, the lenders from time to time party thereto (collectively with JPMorgan Chase Bank, N.A., the “Lenders”), and JPMorgan Chase Bank, N.A., as the administrative agent. The Credit Agreement provides for the Revolving Credit Facility in the aggregate principal amount of up to $1.0 billion. All loans under the Credit Agreement will mature on July 29, 2027 (the “Scheduled Maturity Date”). Subject to certain conditions set forth in the Credit Agreement, we may borrow, prepay and reborrow under the Revolving Credit Facility and terminate or reduce the Lenders’ commitments at any time prior to the Scheduled Maturity Date.

We are required to pay a quarterly commitment fee on the daily amount of the undrawn portion of the revolving commitments under the Revolving Credit Facility at a rate per annum of (i) 0.20% if the Company’s consolidated leverage ratio is less than 1.0 to

1.0; (ii) 0.225% if the Company’s consolidated leverage ratio is greater than or equal to 1.0 to 1.0 but less than 2.0 to 1.0; (iii) 0.25% if the Company’s consolidated leverage ratio is greater than or equal to 2.0 to 1.0 but less than 3.0 to 1.0; or (iv) 0.275% if the Company’s consolidated leverage ratio is greater than or equal to 3.0 to 1.0.

Stock Repurchase Plan and Withholding Shares to Cover Taxes. In May 2016, our Board of Directors authorized a stock repurchase plan allowing for the repurchase of shares of our common stock in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b5-1 programs. Since the initial authorization of the stock repurchase plan, our Board of Directors has amended and extended and authorized new stock repurchase plans from time to time. In August 2022, our Board of Directors authorized the repurchase of up to $1.1 billion of our common stock over a two-year period expiring on August 15, 2024. As of June 30, 2024, there was $705.9 million available for repurchases under our stock repurchase plan. On July 29, 2024, our Board of Directors increased and extended the stock repurchase plan, such that $1.5 billion is available for repurchases between July 29, 2024 and August 15, 2026. Our stock repurchase plan may be suspended or discontinued at any time. The actual timing, number and value of shares repurchased depends on a number of factors, including the market price of our common stock, general market and economic conditions, shares withheld for taxes associated with the vesting of equity incentive awards and other corporate considerations.

During the six months ended June 30, 2024, we repurchased an aggregate of 589,424 shares of our common stock at an average cost of $158.06 per share, including 68,482 shares withheld to satisfy tax withholding obligations for certain employees upon the vesting of equity incentive awards. Our payment of the taxes on behalf of those employees resulted in an aggregate cash expenditure of $12.4 million and, as such, we generally subtract the amounts attributable to such withheld shares from the aggregate amount available for future purchases under our stock repurchase plan.

Dividends on Common Stock. In May 2023, our Board of Directors adopted a dividend policy under which we intend to pay quarterly cash dividends on our common stock.

The following table summarizes dividend activity during 2024.


Declaration Date	Record Date	Payment Date	Per Share Dividend		Total Cash Dividends Paid (in thousands)(1)
April 29, 2024	May 28, 2024	June 10, 2024	$	0.375	$	21,191
February 5, 2024	March 4, 2024	March 18, 2024	$	0.375	$	21,209

(1)

All unvested equity incentive awards currently outstanding are entitled to receive dividends or dividend equivalents, provided that such dividends or dividend equivalents are withheld by the Company and distributed to the applicable holder upon vesting of the award. Dividends declared, as reported in the consolidated statements of stockholders’ equity, includes dividends and dividend equivalents payable to holders of unvested equity incentive awards and, as a result, exceeds the amount of total cash dividends paid presented in this column.

On July 29, 2024, our Board of Directors declared a quarterly cash dividend of $0.375 per share of common stock payable on September 9, 2024 to stockholders of record at the close of business on August 26, 2024.

The declaration, timing and amount of each quarterly cash dividend are subject to the approval of the Board of Directors, including a determination that the dividend policy and the declaration of dividends thereunder are in the best interests of our stockholders and are in compliance with applicable law. The Board of Directors retains the power to modify, suspend, or cancel the dividend policy in any manner and at any time that it may deem necessary or appropriate.

Cash Flow Analysis

Our cash flows from operating activities have historically been significantly impacted by profitability, implementation revenues received but deferred, our investment in sales and marketing to drive growth, and research and development. Our ability to meet future liquidity needs will be driven by our operating performance and the extent of continued investment in our operations. Failure to generate sufficient revenues and related cash flows could have a material adverse effect on our ability to meet our liquidity needs and achieve our business objectives.

As our business grows, we expect our capital expenditures related to research and development and other strategic expansion activities to continue to increase. We completed an expansion of our corporate headquarters, which was placed into service in the second quarter of 2024. We anticipate that our capital expenditures in the second half of 2024 will be generally consistent with the comparable period in the prior year. Depending on certain growth opportunities, we may choose to accelerate investments in sales and marketing, acquisitions, technology and services. Actual future capital requirements will depend on many factors, including our future revenues, cash from operating activities and the level of expenditures in all areas of our business. In addition, we purchased the

naming rights to the downtown Oklahoma City arena that is home to the Oklahoma City Thunder National Basketball Association franchise. Under the terms of the naming rights agreement, we committed to make payments escalating annually from $4.0 million in 2021 to $6.1 million in 2035. The payments are due in the fourth quarter of each year. Upon the conclusion of the initial term, the agreement may be extended upon the mutual agreement of both parties for an additional five-year period.

As part of our payroll and payroll tax filing services, we collect funds from our clients for employment taxes, which we remit to the appropriate tax agencies. We typically invest these funds in money market funds, demand deposit accounts, certificates of deposit, commercial paper and U.S. treasury securities from which we earn interest income during the period between receipt and disbursement of such funds.

Our cash flows from investing and financing activities are influenced by the amount of funds held for clients, which can vary significantly from quarter to quarter. The balance of the funds we hold depends on our clients’ payroll calendars and, therefore, such balance changes from period to period in accordance with the timing of each payroll cycle.

Our cash flows from financing activities are also affected by the extent to which we use available cash to purchase shares of common stock under our stock repurchase plan as well as equity incentive award vesting events that result in net share settlements and the Company paying withholding taxes on behalf of certain employees. Additionally, we intend to continue to pay a quarterly cash dividend, subject to the discretion of the Board of Directors.

The following table summarizes the consolidated statements of cash flows for the six months ended June 30, 2024 and 2023:


	Six Months Ended June 30,
	2024			2023
Net cash provided by (used in):
Operating activities	$	280,732		$	251,991
Investing activities		71,678			(83,378	)
Financing activities		(160,449	)		(234,350	)
Change in cash, cash equivalents, restricted cash and restricted cash equivalents	$	191,961		$	(65,737	)

Operating Activities

Cash provided by operating activities for the six months ended June 30, 2024 primarily consisted of payments received from our clients and interest earned on funds held for clients. Cash used in operating activities primarily consisted of personnel-related expenditures to support the growth and infrastructure of our business. These payments included costs of operations, advertising and other sales and marketing efforts, IT infrastructure development, product research and development and security and administrative costs. Compared to the six months ended June 30, 2023, our operating cash flows for the six months ended June 30, 2024 were positively impacted by the growth of our business.

Investing Activities

Cash provided by investing activities for the six months ended June 30, 2024 increased from the comparable prior year period due to a $140.0 million increase in proceeds from investments from funds held for clients and a $25.0 million decrease in purchases of investments from funds held for clients, which were partially offset by a $9.9 million increase in purchases of property and equipment.

Financing Activities

Cash used in financing activities for the six months ended June 30, 2024 decreased from the comparable prior year period primarily due to the impact of a $176.7 million change related to the client funds obligation, which is due to the timing of receipts from our clients and payments made to our clients’ employees and applicable taxing authorities on their behalf. The decrease in cash used in financing activities was partially offset by a $80.8 million increase in repurchases of common stock, a $20.7 million increase in dividends paid and a $1.3 million increase in withholding taxes paid related to net share settlements.

Contractual Obligations

Our principal commitments primarily consist of leases for office space and the naming rights agreement. For additional information regarding our naming rights agreement, leases, and our commitments and contingencies, see “Note 4. Goodwill and Intangible Assets, Net”, “Note 5. Leases” and “Note 13. Commitments and Contingencies” in the Form 10-K and “Note 5. Goodwill and Intangible Assets, Net” and “Note 12. Commitments and Contingencies” in the notes to our unaudited consolidated financial statements included elsewhere in this Form 10-Q.

Critical Accounting Policies and Estimates

Our consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions to ensure that management believes them to be reasonable under the then-current facts and circumstances. Actual amounts and results may materially differ from these estimates made by management under different assumptions and conditions.

Certain accounting policies that require significant management estimates, and are deemed critical to our results of operations or financial position, are discussed in the critical accounting policies and estimates section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Form 10-K. There have been no material changes to the critical accounting policies disclosed in the Form 10-K.

Non-GAAP Financial Measures

Management uses adjusted EBITDA and non-GAAP net income as supplemental measures to review and assess the performance of our core business operations and for planning purposes. We define (i) adjusted EBITDA as net income plus interest expense, taxes, depreciation and amortization, non-cash stock-based compensation expense, certain transaction expenses that are not core to our operations (if any) and any loss on the extinguishment of debt and (ii) non-GAAP net income as net income plus non-cash stock-based compensation expense, certain transaction expenses that are not core to our operations (if any) and any loss on the extinguishment of debt, all of which are adjusted for the effect of income taxes. Adjusted EBITDA and non-GAAP net income are metrics that provide investors with greater transparency to the information used by management in its financial and operational decision-making. We believe these metrics are useful to investors because they facilitate comparisons of our core business operations across periods on a consistent basis, as well as comparisons with the results of peer companies, many of which use similar non-GAAP financial measures to supplement results under U.S. GAAP. In addition, adjusted EBITDA is a measure that provides useful information to management about the amount of cash available for reinvestment in our business, paying dividends, repurchasing common stock and other purposes. Management believes that the non-GAAP measures presented in this Form 10-Q, when viewed in combination with our results prepared in accordance with U.S. GAAP, provide a more complete understanding of the factors and trends affecting our business and performance.

Adjusted EBITDA and non-GAAP net income are not measures of financial performance under U.S. GAAP, and should not be considered a substitute for net income, which we consider to be the most directly comparable U.S. GAAP measure. Adjusted EBITDA and non-GAAP net income have limitations as analytical tools, and when assessing our operating performance, you should not consider adjusted EBITDA or non-GAAP net income in isolation, or as a substitute for net income or other consolidated statements of comprehensive income data prepared in accordance with U.S. GAAP. Adjusted EBITDA and non-GAAP net income may not be comparable to similarly titled measures of other companies and other companies may not calculate such measures in the same manner as we do.

The following tables reconcile net income to adjusted EBITDA, net income to non-GAAP net income and earnings per share to non-GAAP net income per share on a basic and diluted basis:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024			2023
Net income to adjusted EBITDA:
Net income	$	67,970	$	64,516	$	315,157		$	183,812
Interest expense		782		602		1,564			1,439
Provision for income taxes		31,175		28,331		74,029			74,634
Depreciation and amortization		35,614		27,738		68,082			54,010
EBITDA		135,541		121,187		458,832			313,895
Non-cash stock-based compensation expense		24,120		35,366		(69,670	)		63,185
Adjusted EBITDA	$	159,661	$	156,553	$	389,162		$	377,080


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Net income to non-GAAP net income:
Net income	$	67,970		$	64,516		$	315,157		$	183,812
Non-cash stock-based compensation expense		24,120			35,366			(69,670	)		63,185
Income tax effect on non-GAAP adjustments		(255	)		(5,620	)		(7,004	)		(10,084	)
Non-GAAP net income	$	91,835		$	94,262		$	238,483		$	236,913

Weighted average shares outstanding:
Basic		56,451			57,920			56,499			57,895
Diluted		56,771			58,033			56,548			58,050

Earnings per share, basic	$	1.20		$	1.11		$	5.58		$	3.17
Earnings per share, diluted	$	1.20		$	1.11		$	5.57		$	3.17
Non-GAAP net income per share, basic	$	1.63		$	1.63		$	4.22		$	4.09
Non-GAAP net income per share, diluted	$	1.62		$	1.62		$	4.22		$	4.08


	Three Months Ended June 30,					Six Months Ended June 30,
	2024		2023			2024			2023
Earnings per share to non-GAAP net income per share, basic:
Earnings per share, basic	$	1.20	$	1.11		$	5.58		$	3.17
Non-cash stock-based compensation expense		0.43		0.61			(1.23	)		1.09
Income tax effect on non-GAAP adjustments		—		(0.09	)		(0.13	)		(0.17	)
Non-GAAP net income per share, basic	$	1.63	$	1.63		$	4.22		$	4.09


	Three Months Ended June 30,					Six Months Ended June 30,
	2024		2023			2024			2023
Earnings per share to non-GAAP net income per share, diluted:
Earnings per share, diluted	$	1.20	$	1.11		$	5.57		$	3.17
Non-cash stock-based compensation expense		0.42		0.61			(1.23	)		1.09
Income tax effect on non-GAAP adjustments		—		(0.10	)		(0.12	)		(0.18	)
Non-GAAP net income per share, diluted	$	1.62	$	1.62		$	4.22		$	4.08

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Sensitivity

As of June 30, 2024, we had corporate cash and cash equivalents totaling $346.5 million and funds held for clients cash and cash equivalents totaling $2.3 billion. These amounts are invested primarily in demand deposit accounts and money market funds. We consider all highly liquid debt instruments with an original maturity of three months or less and SEC-registered money market mutual funds to be cash equivalents. Additionally, we had available-for-sale securities totaling $34.9 million included within funds held for clients on the consolidated balance sheets as of June 30, 2024. Our available-for-sale securities consisted of U.S. treasury securities with an original maturity greater than one year. The primary objectives of our investing activities are capital preservation, meeting our liquidity needs and, with respect to investing client funds, generating interest income while maintaining the safety of principal. We do not enter into investments for trading or speculative purposes.

Our investments are subject to market risk due to changes in interest rates. The market value of fixed rate securities may be adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates, or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. We classify all debt securities as available-for-sale and, as a result, no gains or losses are recognized due to changes in interest rates until such securities are sold or decreases in fair value are determined to be nonrecoverable. To date, we have not recorded any credit impairment losses on our portfolio.

As of June 30, 2024, a hypothetical increase or decrease in interest rates of 100 basis points would result in an approximately $24.6 million increase or decrease, respectively, in interest earned on funds held for clients over the ensuing 12-month period. Interest earned on funds held for clients is included in recurring revenues in the consolidated statements of comprehensive income. There are no incremental costs of revenue associated with changes in interest earned on funds held for clients.

An immediate increase in interest rates of 100 basis points would have resulted in a $0.1 million reduction in the aggregate market value of our fixed rate securities as of June 30, 2024. An immediate decrease in interest rates of 100 basis points would have resulted in a $0.1 million increase in the aggregate market value of our fixed rate securities as of June 30, 2024. These estimates are based on a sensitivity model that measures market value changes when changes in interest rates occur.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, including our Chief Executive Officer and our Chief Financial Officer, evaluated, as of June 30, 2024, the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2024 to ensure that information required to be disclosed by us in this Form 10-Q is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

We believe, however, that a controls system, no matter how well designed and operated, can only provide reasonable assurance that the objectives of the controls systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

There have been no material changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are involved in various disputes, claims, suits, investigations and legal proceedings arising in the ordinary course of business. “Item 3. Legal Proceedings” of the Form 10-K includes a discussion of legal proceedings. There have been no material changes from the information set forth in “Item 3. Legal Proceedings” of the Form 10-K. We believe that the resolution of current pending legal matters will not have a material adverse effect on our business, financial condition, results of operations or cash flows. Nonetheless, we cannot predict the outcome of these proceedings, as legal matters are subject to inherent uncertainties, and there exists the possibility that the ultimate resolution of these matters could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes from the information set forth in “Item 1A. Risk Factors” in the Form 10-K filed with the SEC on February 15, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The number of shares of common stock repurchased by us during the three months ended June 30, 2024 is set forth below.


	Total Number of Shares Purchased		Average Price Paid per Share(2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)(2)
April 1 - 30, 2024(3)		11,200	$	193.73		11,200	$	793,866,000
May 1 - 31, 2024(4)		242,518	$	172.96		242,518	$	751,920,000
June 1 - 30, 2024(5)		320,025	$	143.72		320,025	$	705,926,000
Total		573,743				573,743

(1)

Pursuant to a stock repurchase plan announced on November 20, 2018, we were authorized to purchase (in the aggregate) up to $150.0 million of our common stock in open market purchases, privately negotiated transactions or by other means. On May 13, 2021, we announced that our Board of Directors increased the availability under the existing stock repurchase plan to $300.0 million and extended the expiration date to May 13, 2023. On June 7, 2022, we announced that our Board of Directors increased the availability under the existing stock repurchase plan to $550.0 million and extended the expiration date to June 7, 2024. On August 15, 2022, we announced that our Board of Directors increased the availability under the existing stock repurchase plan to $1.1 billion and extended the expiration date to August 15, 2024. On July 29, 2024, we announced that our Board of Directors increased the availability under the existing stock repurchase plan to $1.5 billion and extended the expiration date to August 15, 2026.

(2)

Exclusive of the impact of the one-percent excise tax under the Inflation Reduction Act of 2022.

(3)

Consists of shares withheld to satisfy tax withholding for certain employees upon the vesting of equity incentive awards.

(4)

Includes 40,718 shares withheld to satisfy tax withholding for certain employees upon the vesting of equity incentive awards.

(5)

Includes 883 shares withheld to satisfy tax withholding for certain employees upon the vesting of equity incentive awards.

Item 5. Other Information

Rule 10b5-1 Trading Arrangements

During the quarter ended June 30, 2024, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of the Company adopted, modified, or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408(a) of Regulation S-K).

Item 6. Exhibits

The following exhibits are incorporated herein by reference or are filed with this Quarterly Report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K):


Exhibit No.		Description

3.1		Amended and Restated Certificate of Incorporation of Paycom Software, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Amendment No. 1 to the Registration Statement on Form S-1/A dated March 31, 2014, filed with the SEC on March 31, 2014).

3.2		Amended and Restated Bylaws of Paycom Software, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated February 7, 2024, filed with the SEC on February 7, 2024).

4.1		Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Amendment No. 1 to the Registration Statement on Form S-1/A dated March 31, 2014, filed with the SEC on March 31, 2014).

10.1+		Form of Restricted Stock Unit Award Agreement – Performance-Based Vesting (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated April 1, 2024, filed with the SEC on April 5, 2024).

10.2+		Letter Agreement, by and between Paycom Software, Inc. and Amy Walker, dated April 4, 2024 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated April 1, 2024, filed with the SEC on April 5, 2024).

10.3+		Independent Consultant and Services Agreement, by and between Paycom Payroll, LLC and Holly Faurot, dated April 4, 2024 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K dated April 1, 2024, filed with the SEC on April 5, 2024).

10.4+		Release and Award Cancellation and Acceleration Agreement, by and between Paycom Software, Inc. and Holly Faurot, dated April 4, 2024 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K dated April 1, 2024, filed with the SEC on April 5, 2024).

10.5+*		Severance and Release Agreement, by and among Paycom Software, Inc., Paycom Payroll, LLC and Christopher G. Thomas, dated May 29, 2024.

10.6+*		Letter Agreement, by and among Paycom Software, Inc., Paycom Payroll, LLC and Randy Peck, dated May 30, 2024.

31.1*		Certification of the Chief Executive Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of the Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of the Chief Executive Officer and Chief Financial Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


101.INS		Inline XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		Inline XBRL Taxonomy Extension Schema With Embedded Linkbases Documents.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

+ Management contract or compensatory plan or arrangement.

* Filed herewith.

** The certifications attached as Exhibit 32.1 are not deemed “filed” with the SEC and are not to be incorporated by reference into any filing of Paycom Software, Inc. under the Securities Act whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	PAYCOM SOFTWARE, INC.

Date: August 1, 2024	By:	/s/ Chad Richison
		Chad Richison
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: August 1, 2024	By:	/s/ Craig E. Boelte
		Craig E. Boelte
		Chief Financial Officer
		(Principal Accounting Officer and Principal Financial Officer)

SEVERANCE AND RELEASE agreement

This Severance and Release Agreement (this “Agreement”) is entered into by and among Paycom Payroll, LLC (“Employer”) and Paycom Software, Inc. (“Paycom Software”) (Employer and Paycom Software are collectively referenced as, the “Company”) and Christopher G. Thomas (“Employee”). The Company and Employee are referred to herein individually as a “Party” and collectively as the “Parties.”

WHEREAS, Employee has been employed by Employer and has served as Co-Chief Executive Officer of the Company;

WHEREAS, Employee resigned from all positions with the Company and its subsidiaries on May 29, 2024 (the “Separation Date”); and

WHEREAS, the Parties desire to set forth Employee’s separation benefits and obligations and to finally, fully and completely resolve all matters arising from or during Employee’s employment, any benefits, bonuses and compensation connected with such employment and all other matters that the Parties may have for any reason;

NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

End of Employee’s Employment. Employee agrees that on and after the Separation Date, Employee shall no longer report to the Company’s offices for work. All of Employee’s employment, officer, director or other positions with Employer, Paycom Software and their subsidiaries and affiliates shall terminate effective as of the Separation Date. Employee shall execute all documents and take such further steps as may be required to effectuate such termination(s). Employee shall not perform any work and shall not make any representations or execute any documents, or take any other actions, on behalf of the Company as of the Separation Date. Employee agrees that this Agreement fully supersedes any and all prior agreements relating to Employee’s employment with Employer, except for (a) that certain Non-Solicitation Agreement between Employee and Employer effective November 8, 2018 (the “Non-Solicitation Agreement”), (b) that certain Employee Confidentiality, Non-Disparagement, Non-Disclosure, Proprietary Information and Indemnification Agreement between Employee and Employer dated November 13, 2018 (the “Confidentiality Agreement”), (c) Paycom’s Incentive-Based Compensation Recovery Agreement (the “Recovery Agreement”), and (d) the clawback and forfeiture provisions of Section 4 of applicable Award Agreements (as defined below).

Consideration.

(a)

Provided that Employee complies with this Agreement, and does not revoke this Agreement under Section 17, in consideration of Employee’s execution of this Agreement and promises herein, including, without limitation, the release of claims against the Company, the Company shall provide for the following payments and benefits (collectively, referred to herein as the “Severance Benefits”):

Page 1

(i) An amount equal to Eight Hundred and Twelve Thousand Eight Hundred and Seventy-Six Dollars ($812,876.00), which Employee agrees is equal to the sum of twelve (12) months of Employee’s base salary, and the cost of twelve (12) months of coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended. The Severance Benefits will be payable in a single lump sum on the Company’s first regular payroll date following the Effective Date (as defined below).

(ii) Accelerated vesting of two thousand (2,000) of the Unvested Time Shares (as defined below), effective as of the Effective Date.

The Company shall have no obligation to provide the amounts described in this Section 2(a) unless Employee executes and does not revoke this Agreement. The Severance Benefits provided in this Section 2(a) shall be subject to all applicable tax withholdings and deductions. The amounts payable pursuant to this Section 2(a) shall not be treated as compensation under the Company’s 401(k) Plan or any other retirement plan. Employee acknowledges and agrees that the Severance Benefits are full and fair consideration between the Parties and that Employee is not otherwise entitled to the amounts and benefits set forth in this Section 2(a).

(b)

In the event Employee fails to timely execute this Agreement or revokes this Agreement in accordance with Section 17 below, Employee will only receive his base salary through the Separation Date; accrued and unused paid time off in the amount of $117,870.65, less applicable tax withholdings and deductions; and unreimbursed business expenses in accordance with the Company’s policies.

(c)

(i) Pursuant to the Paycom Software, Inc. 2014 Long-Term Incentive Plan, Paycom Software previously granted Employee equity awards, as evidenced by (A) that certain Restricted Stock Award Agreement – Market-Based Vesting, dated February 5, 2021, under which 278 market-based shares of restricted stock were granted and 139 shares remain unvested and outstanding, (B) that certain Restricted Stock Award Agreement – Time-Based Vesting, dated February 5, 2021, under which 652 time-based shares of restricted stock were granted and 211 shares remain unvested and outstanding, (C) that certain Restricted Stock Award Agreement – Market-Based Vesting, dated February 2, 2022, under which 300 market-based shares of restricted stock were granted and 300 shares remain unvested and outstanding, (D) that certain Restricted Stock Award Agreement – Time-Based Vesting, dated February 2, 2022, under which 700 time-based shares of restricted stock were granted and 400 shares remain unvested and outstanding, (E) that certain Restricted Stock Award Agreement – Market-Based Vesting, dated February 4, 2023, under which 416 market-based shares of restricted stock were granted and 416 shares remain unvested and outstanding, and (F) that certain Restricted Stock Award Agreement – Time-Based Vesting, dated February 4, 2023, under which 969 time-based shares of restricted stock were granted and 761 shares remain unvested and outstanding; and (ii) pursuant to the Paycom Software, Inc. 2023 Long-Term Incentive Plan, Paycom Software previously granted Employee equity awards, as evidenced by (A) that certain Restricted Stock Unit Award Agreement – Time-Based Vesting (Executive), dated May 2, 2023, under which 1,242 time-based restricted stock units (“RSUs”) were granted and 828 RSUs remain unvested and outstanding, (B) that certain Restricted Stock Award Agreement – Time-Based Vesting (Executive), dated May 2, 2023, under which 22,000 time-based shares of restricted stock were granted and 18,000 shares remain unvested and outstanding, (C) that certain Restricted Stock Unit Award Agreement – Time-Based Vesting

Page 2

(Executive), dated February 7, 2024, under which 17,209 time-based RSUs were granted and 17,209 RSUs remain outstanding, (D) that certain Restricted Stock Unit Award Agreement – Performance-Based Vesting, dated February 7, 2024, under which 15,000 performance-based RSUs (“PSUs”) were granted and all of which remain unvested and outstanding, (E) that certain Restricted Stock Unit Award Agreement – Time-Based Vesting (Executive), dated March 1, 2024, under which 7,236 RSUs were granted and all of which remain unvested and outstanding, and (F) that certain Restricted Stock Unit Award Agreement – Performance-Based Vesting, dated March 1, 2024, under which 7,236 PSUs were granted and all of which remain unvested and outstanding (the agreements identified in clauses (i) and (ii), collectively, the “Award Agreements”). Of the equity awards previously granted to Employee under the Award Agreements, as of immediately prior to the Separation Date, (1) 19,372 total shares of time-based restricted stock were unvested and outstanding (the “Unvested Time Shares”); (2) 855 total shares of market-based restricted stock were unvested and outstanding (the “Unvested Market Shares”); (3) 25,273 total RSUs were unvested and outstanding (the “Unvested RSUs”); and (4) 22,236 total PSUs were unvested and outstanding (the “Unvested PSUs”). Employee acknowledges and agrees that, notwithstanding anything to the contrary in the Award Agreements, all Unvested Time Shares (other than the Accelerated Shares (as defined below)), all Unvested Market Shares, all Unvested RSUs, and all Unvested PSUs shall be cancelled, terminated, and of no further force or effect, effective as of the Separation Date. However, two thousand (2,000) of the Unvested Time Shares (the “Accelerated Shares”) are eligible to vest on the Effective Date in accordance with Section 2(a) above. If Employee does not execute and timely return this Agreement or otherwise revokes this Agreement, the Accelerated Shares shall also be forfeited by Employee, and the Company shall have no further obligations or liabilities to Employee under the Award Agreements with respect to any forfeited shares. Employee acknowledges and agrees that the clawback and forfeiture provisions of Section 4 of applicable Award Agreements shall survive Employee’s termination of employment.

(d)

Other than the compensation and payments provided for in this Agreement, Employee shall not be entitled to any additional compensation, bonuses, payments, equity grants, options or benefits under any agreement or any benefit plan, long term incentive plan, short term incentive plan, severance plan or bonus or incentive program established by the Company.

Release. In consideration of the promises of the Company provided herein, including, without limitation, the Severance Benefits, and other consideration provided for in this Agreement, that being good and valuable consideration, the receipt, adequacy and sufficiency of which Employee acknowledges, Employee, on Employee’s own behalf and on behalf of Employee’s agents, administrators, representatives, executors, successors, heirs, devisees and assigns (collectively, the “Releasing Parties”) hereby fully and forever waives, releases, extinguishes and discharges the Company and all of its affiliates, subsidiaries and each of their respective past, present and future parents, owners, officers, directors, shareholders, members, executives, employees, consultants, independent contractors, partners, agents, attorneys, advisers, insurers, fiduciaries, employee benefit plans, representatives, successors and assigns (each, a “Released Party” and collectively, the “Released Parties”), jointly and severally, from any and all claims, rights, demands, debts, obligations, losses, causes of action, suits, controversies, setoffs, affirmative defenses, counterclaims, third party actions, damages, penalties, costs, expenses, attorneys’ fees, liabilities and indemnities of any kind or nature whatsoever (collectively, the “Claims”), whether known or unknown, suspected or unsuspected, accrued or unaccrued, whether at law, equity, administrative, statutory or otherwise, and whether for injunctive relief, back pay,

Page 3

front pay, fringe benefits, reinstatement, reemployment, compensatory damages, punitive damages, or any other kind of damages, which any of the Releasing Parties have, had or may have against any of the Released Parties relating to or arising out of any matter arising on or before the date this Agreement is executed by Employee. Such released Claims include, without limitation, all Claims arising from or relating to Employee’s hiring by the Company, employment with the Company or the termination of that employment relationship or any circumstances related thereto, or any other matter, cause or thing whatsoever, including without limitation all Claims arising at law or equity or sounding in contract (express or implied) or tort, Claims arising by statute, common law or otherwise, Claims arising under any federal, state, county or local laws, of any jurisdiction, including Claims for wrongful discharge, libel, slander, breach of express or implied contract or implied covenant of good faith and fair dealing, Claims in connection with or related to any rights to acquire securities of Paycom Software pursuant to the Award Agreements (other than the Accelerated Shares), Claims for alleged fraud, concealment, negligence, negligent misrepresentation, promissory estoppel, quantum meruit, intentional or negligent infliction of emotional distress, violation of public policy, and Claims for discrimination, retaliation, harassment and Claims arising under any laws that prohibit age, sex, sexual orientation, race, national origin, color, disability, religion, veteran, workers’ compensation or any other form of discrimination, harassment, or retaliation, including, without limitation, Claims under the Age Discrimination in Employment Act of 1967, as amended, the Americans with Disabilities Act of 1990, as amended, the Rehabilitation Act of 1973, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §1981, the Civil Rights Act of 1991, the Civil Rights Act of 1866 and/or 1871, the Equal Pay Act of 1963, the Lilly Ledbetter Fair Pay Act of 2009, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, as amended, the Family and Medical Leave Act of 1993, the Occupational Safety and Health Act, the Employee Polygraph Protection Act, the Uniformed Services Employment and Reemployment Rights Act, the Worker Adjustment and Retraining Notification Act, the Genetic Information Nondiscrimination Act, the National Labor Relations Act, the Labor Management Relations Act, the Immigration Reform and Control Act, the Oklahoma Anti-Discrimination Act, the Oklahoma Standards for Workplace Drug and Alcohol Testing Act, Oklahoma medical marijuana laws, retaliation under the Administrative Workers’ Compensation Act and the Oklahoma Workers’ Compensation Act, Oklahoma public policy, Oklahoma’s Genetic Non-Discrimination in Employment Act, any statute or laws of the State of Oklahoma, any other similar or equivalent federal or state laws, any other federal, state, local, municipal or common law whistleblower, discrimination or anti-retaliation statute law or ordinance, and any other Claims arising under state or federal law, as well as any expenses, costs or attorneys’ fees. Except as required by law, Employee agrees that Employee will not commence, maintain, initiate, or prosecute, or cause, encourage, assist, volunteer, advise or cooperate with any other person to commence, maintain, initiate or prosecute, any action, lawsuit, proceeding, charge, petition, complaint or Claim before any court, agency or tribunal against the Company or any of the Released Parties arising from, concerned with, or otherwise relating to, in whole or in part, Employee’s employment, the terms and conditions of Employee’s employment, or Employee’s separation from employment with the Company or any of the matters or Claims discharged and released in this Agreement. This release shall not apply to any of the Company’s obligations under this Agreement.

No Interference. Nothing in this Agreement is intended to interfere with Employee’s right to report possible violations of federal, state or local law or regulation to any governmental or law enforcement agency or entity, or to make other disclosures that are protected

Page 4

under the whistleblower provisions of federal or state law or regulation. Employee further acknowledges that nothing in this Agreement is intended to interfere with Employee’s right to file a claim or charge with, or testify, assist, or participate in an investigation, hearing, or proceeding conducted by, the Equal Employment Opportunity Commission (the “EEOC”), any state human rights commission, or any other government agency or entity. However, by executing this Agreement, Employee hereby waives the right to recover any damages or benefits in any proceeding Employee may bring before the EEOC, any state human rights commission, or any other government agency or entity or in any proceeding brought by the EEOC, any state human rights commission, or any other government agency or entity on Employee’s behalf with respect to any Claim released in this Agreement; except that Employee does not waive any right to, and shall not be precluded from seeking, any government issued award including any whistleblower award pursuant to Section 21F of the Securities Exchange Act of 1934 or similar provision.

No Admission of Liability. This Agreement shall not in any way be construed as an admission by the Company or Employee of any acts of wrongdoing or violation of any statute, law, or legal right. Rather, the Parties specifically deny and disclaim that either has any liability to the other but are willing to enter this Agreement at this time to definitely resolve once and forever this matter and to avoid the costs, expense, and delay of litigation.

Known Violations. Employee represents and warrants that Employee is not aware of any illegal acts committed by or on behalf of the Company and represents that if Employee was aware of any such conduct, that Employee properly reported the same to the Paycom Software Board of Directors in writing in accordance with his fiduciary duties to the Company and applicable law.

Return of Company Property. Within three (3) days of the Separation Date, Employee shall, to the extent not previously returned or delivered, without copying or retaining any copies: (a) return all equipment, records, files, documents, data, computer programs, programs or other materials and property in Employee’s possession which belong to the Company or any one or more of its affiliates, including, without limitation, all computer access codes, messaging devices, credit cards, cell phones, laptops, computers and related equipment, keys and access cards; and (b) deliver all original and copies of Confidential Information (as such term is defined in the Award Agreements) of the Company, notes, materials, records, reports, plans, data or other documents, files or programs (whether stored in paper form, computer form, digital form, electronically or otherwise or on Employee’s personal computer or any other media) that relate or refer to (1) the Company or any one or more of its affiliates, or (2) the Company’s or any one or more of its affiliates’ financial information, financial data, financial statements, business information, strategies, sales, customers, suppliers, Confidential Information or similar information. Should Employee later discover additional items described or referenced in subsections (a) or (b) above, Employee will promptly notify the Company and return/deliver such items to the Company.

Non-Disclosure and Protective Covenants. Employee acknowledges and agrees to honor and abide by his non-disclosure, non-solicitation and non-disparagement obligations in each of the Non-Solicitation Agreement, the Confidentiality Agreement, the Recovery Agreement, and the Award Agreements.

Page 5

Cooperation. Employee hereby agrees to provide Employee’s full cooperation, at the request of the Company, with any of the Released Parties in any and all lawsuits, investigations or other legal, equitable or business matters or proceedings that involve any matters on which Employee worked or had responsibility during Employee’s employment with the Company. Employee also agrees to be available to the Company and its representatives (including attorneys) to provide general advice or assistance as requested by the Company. This includes but is not limited to testifying (and preparing to testify) as a witness in any proceeding or otherwise providing information or reasonable assistance to the Company in connection with any investigation, claim or suit, and cooperating with the Company regarding any investigation, litigation, claims or other disputed items involving the Company that relate to matters within the knowledge or responsibility of Employee. Specifically, Employee agrees (i) to meet with the Company’s representatives, its counsel or other designees at reasonable times and places with respect to any items within the scope of this provision; (ii) to provide truthful testimony regarding same to any court, agency or other adjudicatory body; (iii) to provide the Company with immediate notice of contact or subpoena by any non-governmental adverse party; and (iv) to not voluntarily assist any such non-governmental adverse party or such non-governmental adverse party’s representatives. Employee acknowledges and understands that Employee’s obligations of cooperation under this Section 9 are not limited in time and may include, but shall not be limited to, the need for or availability for testimony. Employee shall receive no additional compensation for time spent assisting the Company pursuant to this Section 9 other than the compensation and benefits provided for in this Agreement, provided that Employee shall be entitled to be reimbursed for any reasonable out-of-pocket expenses incurred in fulfilling Employee’s obligations pursuant to subsections (i) and (ii) above.

10.

No Assignment of Claims. Employee represents that Employee has not transferred or assigned, to any person or entity, any claim involving the Company or the Released Parties, or any portion thereof or interest therein. The Parties acknowledge and agree that nothing in this Agreement shall prohibit payment of any amounts due to Employee under this Agreement to Employee’s estate or legal guardian.

11.

Binding Effect of Agreement. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors, assigns, executors, administrators, heirs and estates. The Released Parties are third-party beneficiaries of this Agreement.

12.

Controlling Law. This Agreement shall in all respects be interpreted, enforced, and governed under the laws of the State of Oklahoma, without regard to any conflict of law principles. The Company and Employee agree that the language in this Agreement shall, in all cases, be construed as a whole, according to its fair meaning, and not strictly for, or against, either of the Parties.

13.

Arbitration. The Parties agree that, other than the Company’s right to seek temporary injunctive relief to prevent any breach of the Non-Solicitation Agreement, the Recovery Agreement, or the Confidentiality Agreement, any dispute that arises between them related to this Agreement, Employee’s employment or separation from employment shall be submitted to confidential, binding and exclusive arbitration with the American Arbitration Association (“AAA”) or such other arbitrator or association as mutually agreed by the Parties. Any such

Page 6

arbitration will be governed by the applicable AAA rules and the Federal Rules of Civil Procedure and will take place in Oklahoma City, Oklahoma.

14.

Severability. Should any provision of this Agreement be declared or determined to be illegal or invalid by any government agency or court of competent jurisdiction, the validity of the remaining parts, terms or provisions of this Agreement shall not be affected, and such provisions shall remain in full force and effect. Upon any finding by any government agency or court of competent jurisdiction that Section 3 above is illegal or invalid, Employee agrees to execute a valid and enforceable general release.

15.

Breach of Agreement. In the event Employee breaches any portion, or challenges the enforceability, of this Agreement, the Award Agreements, the Non-Solicitation Agreement, the Recovery Agreement, or the Confidentiality Agreement, the Company may, in its sole discretion (a) recover all or any portion of the amounts in Section 2(a) already paid to Employee from the date of such breach; (b) to the extent any amount in Section 2(a) has not been paid to Employee in full, terminate the remaining amounts and Employee will not be entitled to receive any further payments; (c) recover attorneys’ fees, expenses and costs the Company incurs in such action; and/or (d) recover any and all other damages to which the Company may be entitled at law or in equity as a result of a breach of this Agreement.

16.

Knowing and Voluntary Waiver. Employee acknowledges that Employee has had an opportunity to review all aspects of this Agreement, the Company is advising and has advised Employee in writing (i.e., through this Agreement) to consult with an attorney of Employee’s own choosing at Employee’s cost, regarding the effect of this Agreement, and Employee has had a reasonable opportunity to do so, if so desired. Employee understands it is Employee’s choice whether or not to enter into this Agreement and that Employee’s decision to do so is voluntary and is made knowingly. Employee acknowledges and understands that this Agreement specifically releases and waives all rights and claims Employee may have under the Age Discrimination in Employment Act prior to the date on which Employee signs this Agreement. Furthermore, Employee acknowledges that the promises and benefits provided for in Section 2 of this Agreement will be delayed until this Agreement becomes effective, enforceable and irrevocable.

17.

Time for Consideration. Employee has knowingly and voluntarily entered into this Agreement and acknowledges that Employee has been given a period of twenty-one (21) days from the date Employee received this Agreement to review and consider this Agreement before executing it. Employee understands that Employee has the right to use as much or as little of the twenty-one (21) day period as Employee wishes before executing this Agreement. Accordingly, Employee understands Employee may execute this Agreement as soon as Employee wishes to execute it within the twenty-one (21) day period. Employee further understands that any revisions to this Agreement will not extend this twenty-one (21) day period. The signed Agreement must be returned to the Company, ATTN: Matthew Paque, Executive Vice President – General Counsel, 7501 W. Memorial Road, Oklahoma City, OK 73142, before the end of such twenty-one (21) day period. Employee further understands that Employee may revoke this Agreement within seven (7) days after signing it, in which case this Agreement and the obligations herein, as well as Employee’s entitlement to receive the Severance Benefits, are null and void. Revocation is only effective if Employee delivers a written notice of revocation to the Company, ATTN: Matthew

Page 7

Paque, Executive Vice President – General Counsel, 7501 W. Memorial Road, Oklahoma City, OK 73142, within seven (7) days after executing the Agreement. Employee understands that the Company’s obligations under this Agreement do not become effective until after the seven (7) day revocation period has expired. This Agreement will become effective, enforceable and irrevocable on the eighth (8th) day after the date on which it is executed by Employee (the “Effective Date”).

18.

Entire Agreement. This Agreement, the Non-Solicitation Agreement, the Confidentiality Agreement, the Recovery Agreement, and the Award Agreements constitute the entire agreement and understanding between the Parties with respect to the subject matter hereof, and fully supersede all prior and contemporaneous negotiations, understandings, representations, writings, discussions and/or agreements between the Parties, whether oral or written, pertaining to or concerning the subject matter of this Agreement, including, without limitation, the February 7, 2024 letter signed by you and Paycom Software. The Company and Employee acknowledge and agree that the Non-Solicitation Agreement, the Confidentiality Agreement, the Recovery Agreement, and the clawback and forfeiture provisions of Section 4 of applicable Award Agreements shall remain in full force and in effect after the Separation Date and that their respective obligations and duties thereunder are not in any way modified or superseded by this Agreement, except that the Company shall have no further obligations or liabilities to Employee under the Award Agreements with respect to any terminated, cancelled or forfeited shares or units. No oral statements or other prior written material not specifically incorporated into this Agreement shall be of any force and effect, and no changes in or additions to this Agreement shall be recognized, unless incorporated into this Agreement by written amendment, such amendment to become effective on the date stipulated in it. Any amendment to this Agreement must be signed by all Parties to this Agreement.

19.

Disclaimer of Reliance. Except for the specific representations expressly made by the Company in this Agreement, Employee specifically disclaims that Employee is relying upon or has relied upon on any communications, promises, statements, inducements, or representation(s) that may have been made, oral or written, regarding the subject matter of this Agreement. The Parties represent that they are relying solely and only on their own judgment in entering into this Agreement.

20.

No Waiver. Failure of the Company to exercise and/or delay in exercising any right, power or privilege in this Agreement shall not operate as a waiver. No waiver of the Company’s rights hereunder shall be effective unless it is in writing and signed by an authorized representative of the Company. The Company’s waiver of any provision of the Agreement shall not constitute (i) a continuing waiver of that provision, or (ii) a waiver of any other provision of this Agreement. Furthermore, no waiver of any breach of any provision shall be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision.

21.

Section 409A. The Company intends that all of the Severance Benefits provided to Employee as described in this Agreement will either comply with or be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the treasury regulations and guidance issued thereunder (“Section 409A”). However, nothing contained in this Agreement shall be construed as a representation, guarantee or other undertaking on the part of the Company that the Severance Benefits are, or will be found to be, exempt from or compliant with the requirements of Section 409A. Employee is solely responsible for determining the tax

Page 8

consequences to Employee of any and all payments made pursuant to this Agreement, including, without limitation, any possible tax consequences under Section 409A.

22.

Counterparts. This Agreement may be executed by the Parties in multiple counterparts, whether or not all signatories appear on these counterparts (including via electronic signatures and exchange of PDF documents via email), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

{Remainder of Page Intentionally Left Blank}

Page 9

PLEASE READ CAREFULLY – THIS AGREEMENT INCLUDES A RELEASE OF CLAIMS, INCLUDING A RELEASE OF CLAIMS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT. BEFORE SIGNING THIS AGREEMENT, YOU MAY TAKE IT HOME, READ IT, AND CAREFULLY CONSIDER IT. YOU ARE ADVISED TO CONSULT WITH AN ATTORNEY OF YOUR CHOICE PRIOR TO EXECUTING THIS AGREEMENT.

My signature below means that I have read this Agreement and agree and consent to all the terms and conditions contained in this Agreement.

Accepted and AGREED TO BY:

Employee


By:	/s/ Christopher G. Thomas
Name:	Christopher G. Thomas
Date:	May 29, 2024

PAYCOM SOFTWARE, INC.


By:	/s/ Matthew Paque
Name:	Matthew Paque
Title:	Executive Vice President, General Counsel and Secretary
Date:	May 29, 2024

PAYCOM PAYROLL, LLC


By:	/s/ Matthew Paque
Name:	Matthew Paque
Title:	Executive Vice President and General Counsel
Date:	May 29, 2024

Signature Page

Randall Peck
Via E-Mail

May 30, 2024

Dear Randy,

We are very pleased to offer you the position of Chief Operating Officer of Paycom Software, Inc. (“Paycom”) and its subsidiaries (collectively, the “Company”), reporting to the Chief Executive Officer of the Company. Your employment in this role is subject to the terms and conditions set forth in this letter.

Your expected start date in this Chief Operating Officer role is May 30, 2024 and is subject to modification by the Company (your “Start Date”). Your position will be based in Oklahoma City, Oklahoma. By signing below, you confirm you understand and agree to the changes in your employment, including, without limitation, any changes from the terms of employment stated in your March 8, 2023 offer letter. This letter does not constitute an employment contract and does not alter the at-will employment relationship.

Effective beginning on the Company’s next regularly scheduled payroll date following the Start Date, you will be paid an annualized base salary of $511,228.00, payable bi-weekly in accordance with the standard payroll practices of the Company and subject to all withholdings and deductions as required by law. You will be eligible for an annual bonus pursuant to the Paycom Software, Inc. Annual Incentive Plan. The performance criteria and potential payouts for the 2024 annual bonus and bonuses thereafter will be determined by the Compensation Committee of Paycom’s Board of Directors (the “Compensation Committee”).

Subject to approval by the Compensation Committee, effective on or as soon as practicable following your Start Date, Paycom will grant you equity awards pursuant to the Paycom Software, Inc. 2023 Long-Term Incentive Plan (the “LTIP”) consisting of: (1) an award of time-based restricted stock units having an approximate aggregate value equal to $833,333.00, as determined by dividing such value by the closing price of a share of Paycom stock on the date of grant (with any fractional shares rounded up to the nearest whole share), subject to time-based vesting in three substantially equal tranches on February 5, 2025, February 5, 2026 and February 5, 2027, provided that you are employed by or otherwise providing services to the Company through the applicable vesting date (the “Time-Based RSU Award”); (2) an award of performance-based restricted stock units having an approximate aggregate value equal to $833,333.00, as determined by dividing such value by the closing price of a share of Paycom stock on the date of grant (with any fractional shares rounded up to the nearest whole share), subject to performance-based vesting based on a “Total Revenues” performance goal for the 2024 performance period, provided that you are employed by or otherwise providing services to the Company through the applicable vesting date (the “Performance-Based Award”); and (3) an award of 37,500 shares of time-based restricted stock, subject to time-based vesting as follows: 6,375 shares vesting on February 5, 2025, 6,375 shares vesting on February 5, 2026, 6,375 shares vesting on February 5, 2027, and 18,375 shares vesting on February 5, 2028, provided that you are employed by or otherwise providing services to the Company through the applicable vesting date (the “Time-Based Stock Award”). The Time-Based RSU Award, the Performance-Based Award and the Time-Based Stock Award shall be subject to the terms and conditions of the LTIP and the applicable award agreement that is provided to you by Paycom in connection with the grant of such awards, including any restrictions on transfer of the awarded shares or units and any forfeiture provisions in the event of a termination of your employment.

While we anticipate a mutually beneficial relationship with you, the Company recognizes your right to terminate this relationship at any time. Similarly, we reserve the same right to alter, modify, or terminate this employment relationship at will at any time with or without notice or cause.

This letter reflects the entire understanding regarding the terms of your employment with the Company with the exception of (a) your agreement to the Company’s corporate and personnel policies, (b) the Non-Solicitation Agreement between you and Paycom Payroll, LLC, dated March 17, 2023, (c) any new non-solicitation (or similar agreement) you may be asked to sign within the first ninety (90) days after the Start Date, (d) the Confidentiality, Non-Disparagement, Non-Disclosure and Proprietary Information Agreement between you and Paycom Payroll, LLC, dated March 17, 2023, (e) any new confidentiality, non-disparagement, non-disclosure and proprietary information agreement (or similar agreement) you may be asked to sign within the first ninety (90) days after the Start Date and (f) any previously granted award agreements under the LTIP or the Paycom Software, Inc. 2014 Long-Term Incentive Plan (including but not limited to the clawback and forfeiture provisions therein). Accordingly, with those exceptions, this letter supersedes and replaces any prior oral or written communication on the subject of your employment by the Company in any capacity. This offer of employment is contingent upon your signing any new agreement with Paycom Payroll, LLC relating to non-competition, non-solicitation, intellectual property assignment, confidentiality, non-disparagement, non-disclosure, proprietary information and/or class action waiver you may be asked to sign within the first ninety (90) days after the Start Date. By signing this letter, you agree that you are not relying on, have not relied on, and you specifically disavow reliance on, any oral or written statement, representation, or inducement relating to your employment that is not contained in this letter.

All of us at the Company are excited about the prospect of you accepting the Chief Operating Officer role. If you have any questions about the above details, please call me immediately. If you wish to accept this position, please sign below and return this letter agreement to me on or before May 31, 2024.

I look forward to hearing from you.

Yours sincerely,


PAYCOM SOFTWARE, INC.

/s/ Matthew Paque
Name:	Matthew Paque
Title:	Executive Vice President, General Counsel and Secretary


ACCEPTED AND AGREED:

/s/ Randy Peck
Randall Peck
Date: May 30, 2024

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a)/15d-14(a) OF THE SECURITIES AND EXHANGE ACT OF 1934, AS AMENDED,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Chad Richison, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Paycom Software, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 1, 2024	By:	/s/ Chad Richison
		Chad Richison
		Chief Executive Officer
		(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a)/15d-14(a) OF THE SECURITIES AND EXHANGE ACT OF 1934, AS AMENDED,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Craig E. Boelte, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Paycom Software, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 1, 2024	By:	/s/ Craig E. Boelte
		Craig E. Boelte
		Chief Financial Officer
		(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 (the “Form 10-Q”) of Paycom Software, Inc. (the “Company”), the undersigned hereby certify in their capacities as Chief Executive Officer and Chief Financial Officer, respectively, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to their knowledge:

(1)

the Form 10-Q fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(2)

the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-Q.


Date: August 1, 2024	By:	/s/ Chad Richison
		Chad Richison
		Chief Executive Officer
		(Principal Executive Officer)

Date: August 1, 2024	By:	/s/ Craig E. Boelte
		Craig E. Boelte
		Chief Financial Officer
		(Principal Financial Officer)

The foregoing certifications are not deemed “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language contained in such filing.

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2024	Jul. 23, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Trading Symbol	PAYC
Entity Registrant Name	Paycom Software, Inc.
Entity Central Index Key	0001590955
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		57,432,442
Title of 12(b) Security	Common Stock, $0.01 par value
Security Exchange Name	NYSE
Entity File Number	001-36393
Entity Tax Identification Number	80-0957485
Entity Address, Address Line One	7501 W. Memorial Road
Entity Address, City or Town	Oklahoma City
Entity Address, State or Province	OK
Entity Incorporation, State or Country Code	DE
Entity Address, Postal Zip Code	73142
City Area Code	405
Local Phone Number	722-6900
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Document Quarterly Report	true
Document Transition Report	false

Unaudited Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 346,456	$ 294,025
Accounts receivable	20,034	16,442
Prepaid expenses	46,529	37,613
Inventory	1,415	1,383
Income tax receivable		18,391
Deferred contract costs	128,728	118,206
Current assets before funds held for clients	543,162	486,060
Funds held for clients	2,303,159	2,327,366
Total current assets	2,846,321	2,813,426
Property and equipment, net	531,884	498,197
Intangible assets, net	48,159	50,112
Goodwill	51,889	51,889
Long-term deferred contract costs	727,956	680,272
Other assets	106,535	103,643
Total assets	4,312,744	4,197,539
Current liabilities:
Accounts payable	14,997	13,875
Income tax payable	10,281
Accrued commissions and bonuses	22,227	30,492
Accrued payroll and vacation	60,533	56,086
Deferred revenue	31,432	22,812
Accrued expenses and other current liabilities	84,215	83,302
Current liabilities before client funds obligation	223,685	206,567
Client funds obligation	2,303,198	2,328,076
Total current liabilities	2,526,883	2,534,643
Deferred income tax liabilities, net	136,213	143,750
Long-term deferred revenue	110,928	107,657
Other long-term liabilities	112,189	108,453
Total long-term liabilities	359,330	359,860
Total liabilities	2,886,213	2,894,503
Commitments and contingencies (Note 12)
Stockholders' equity:
Common stock, $0.01 par value (100,000 shares authorized, 62,887 and 62,675 shares issued at June 30, 2024 and December 31, 2023, respectively; 56,151 and 56,528 shares outstanding at June 30, 2024 and December 31, 2023, respectively)	629	627
Additional paid-in capital	667,197	724,493
Retained earnings	1,743,608	1,469,981
Accumulated other comprehensive earnings (loss)	(305)	(1,039)
Treasury stock, at cost (6,736 and 6,147 shares at June 30, 2024 and December 31, 2023, respectively)	(984,598)	(891,026)
Total stockholders’ equity	1,426,531	1,303,036
Total liabilities and stockholders’ equity	$ 4,312,744	$ 4,197,539

Unaudited Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	62,887,000	62,675,000
Common stock, shares outstanding	56,151,000	56,528,000
Treasury stock, shares	6,736,000	6,147,000

Unaudited Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenues
Total revenues	$ 437,512	$ 401,139	$ 937,393	$ 852,776
Cost of revenues
Operating expenses	67,451	54,617	131,121	107,702
Depreciation and amortization	16,433	12,811	31,394	24,958
Total cost of revenues	83,884	67,428	162,515	132,660
Administrative expenses
Sales and marketing	106,864	106,435	222,388	210,009
Research and development	62,371	49,118	112,880	91,787
General and administrative	70,072	75,965	21,968	141,570
Depreciation and amortization	19,181	14,927	36,688	29,052
Total administrative expenses	258,488	246,445	393,924	472,418
Total operating expenses	342,372	313,873	556,439	605,078
Operating income	95,140	87,266	380,954	247,698
Interest expense	(782)	(602)	(1,564)	(1,439)
Other income (expense), net	4,787	6,183	9,796	12,187
Income before income taxes	99,145	92,847	389,186	258,446
Provision for income taxes	31,175	28,331	74,029	74,634
Net income	$ 67,970	$ 64,516	$ 315,157	$ 183,812
Earnings per share, basic	$ 1.2	$ 1.11	$ 5.58	$ 3.17
Earnings per share, diluted	$ 1.2	$ 1.11	$ 5.57	$ 3.17
Weighted average shares outstanding:
Basic	56,451	57,920	56,499	57,895
Diluted	56,771	58,033	56,548	58,050
Comprehensive earnings:
Net income	$ 67,970	$ 64,516	$ 315,157	$ 183,812
Unrealized net gains on available-for-sale securities	318	(235)	1,155	815
Tax effect	(128)	95	(421)	(105)
Other comprehensive income, net of tax	190	(140)	734	710
Comprehensive earnings:	68,160	64,376	315,891	184,522
Recurring [Member]
Revenues
Total revenues	430,400	394,522	922,296	838,943
Implementation and Other [Member]
Revenues
Total revenues	$ 7,112	$ 6,617	$ 15,097	$ 13,833

Unaudited Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Additional Paid in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Treasury Stock [Member]
Beginning balance, value at Dec. 31, 2022	$ 1,182,607	$ 625	$ 576,622	$ 1,196,968	$ (3,703)	$ (587,905)
Beginning balance, shares at Dec. 31, 2022		62,518				4,651
Vesting of restricted stock, shares		7
Stock-based compensation	32,344		32,344
Repurchases of common stock	(626)					$ (626)
Repurchases of common stock, shares						2
Net income	119,296			119,296
Other comprehensive earnings (loss), net of tax	850				850
Ending balance, value at Mar. 31, 2023	1,334,471	$ 625	608,966	1,316,264	(2,853)	$ (588,531)
Ending balance, shares at Mar. 31, 2023		62,525				4,653
Beginning balance, value at Dec. 31, 2022	1,182,607	$ 625	576,622	1,196,968	(3,703)	$ (587,905)
Beginning balance, shares at Dec. 31, 2022		62,518				4,651
Net income	183,812
Ending balance, value at Jun. 30, 2023	1,406,685	$ 626	649,965	1,358,059	(2,993)	$ (598,972)
Ending balance, shares at Jun. 30, 2023		62,640				4,691
Beginning balance, value at Mar. 31, 2023	1,334,471	$ 625	608,966	1,316,264	(2,853)	$ (588,531)
Beginning balance, shares at Mar. 31, 2023		62,525				4,653
Vesting of restricted stock		$ 1	(1)
Vesting of restricted stock, shares		115
Stock-based compensation	41,000		41,000
Repurchases of common stock	(10,441)					$ (10,441)
Repurchases of common stock, shares						38
Dividends declared	(22,721)			(22,721)
Net income	64,516			64,516
Other comprehensive earnings (loss), net of tax	(140)				(140)
Ending balance, value at Jun. 30, 2023	1,406,685	$ 626	649,965	1,358,059	(2,993)	$ (598,972)
Ending balance, shares at Jun. 30, 2023		62,640				4,691
Beginning balance, value at Dec. 31, 2023	1,303,036	$ 627	724,493	1,469,981	(1,039)	$ (891,026)
Beginning balance, shares at Dec. 31, 2023		62,675				6,147
Vesting of restricted stock, shares		44
Stock-based compensation	(89,675)		(89,675)
Repurchases of common stock	(3,052)					$ (3,052)
Repurchases of common stock, shares						15
Dividends declared	(19,977)			(19,977)
Net income	247,187			247,187
Other comprehensive earnings (loss), net of tax	544				544
Ending balance, value at Mar. 31, 2024	1,438,063	$ 627	634,818	1,697,191	(495)	$ (894,078)
Ending balance, shares at Mar. 31, 2024		62,719				6,162
Beginning balance, value at Dec. 31, 2023	1,303,036	$ 627	724,493	1,469,981	(1,039)	$ (891,026)
Beginning balance, shares at Dec. 31, 2023		62,675				6,147
Net income	315,157
Ending balance, value at Jun. 30, 2024	1,426,531	$ 629	667,197	1,743,608	(305)	$ (984,598)
Ending balance, shares at Jun. 30, 2024		62,887				6,736
Beginning balance, value at Mar. 31, 2024	1,438,063	$ 627	634,818	1,697,191	(495)	$ (894,078)
Beginning balance, shares at Mar. 31, 2024		62,719				6,162
Vesting of restricted stock		$ 2	(2)
Vesting of restricted stock, shares		168
Stock-based compensation	32,381		32,381
Repurchases of common stock	(90,520)					$ (90,520)
Repurchases of common stock, shares						574
Dividends declared	(21,553)			(21,553)
Net income	67,970			67,970
Other comprehensive earnings (loss), net of tax	190				190
Ending balance, value at Jun. 30, 2024	$ 1,426,531	$ 629	$ 667,197	$ 1,743,608	$ (305)	$ (984,598)
Ending balance, shares at Jun. 30, 2024		62,887				6,736

Unaudited Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023
Dividends declared per share	$ 0.375	$ 0.375	$ 0.375

Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash flows from operating activities
Net income	$ 315,157	$ 183,812
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	68,082	54,010
Accretion of discount on available-for-sale securities	(108)	(253)
Non-cash marketing expense	798	839
Loss (Gain) on disposition of property and equipment	12	(21)
Amortization of debt issuance costs	552	620
Stock-based compensation expense	(69,670)	63,185
Deferred income taxes, net	(7,798)	1,706
Other	(161)	111
Changes in operating assets and liabilities:
Accounts receivable	(3,592)	6,650
Prepaid expenses	(8,345)	(10,597)
Inventory	431	336
Other assets	(3,445)	(9,057)
Deferred contract costs	(55,198)	(62,489)
Accounts payable	91	(10,277)
Income taxes, net	28,672	3,645
Accrued commissions and bonuses	(8,265)	(6,560)
Accrued payroll and vacation	4,197	4,954
Deferred revenue	11,891	6,817
Accrued expenses and other current liabilities	7,431	24,560
Net cash provided by operating activities	280,732	251,991
Cash flows from investing activities
Purchases of investments from funds held for clients		(25,000)
Proceeds from investments from funds held for clients	165,000	25,000
Purchases of property and equipment	(93,335)	(83,422)
Proceeds from sale of property and equipment	13	44
Net cash provided by (used in) investing activities	71,678	(83,378)
Cash flows from financing activities
Repurchases of common stock	(80,761)
Withholding taxes paid related to net share settlements	(12,410)	(11,067)
Dividends paid	(42,400)	(21,731)
Net change in client funds obligation	(24,878)	(201,552)
Net cash (used in) financing activities	(160,449)	(234,350)
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	191,961	(65,737)
Cash, cash equivalents, restricted cash and restricted cash equivalents
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period	2,422,760	2,409,095
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period	2,614,721	2,343,358
Cash and cash equivalents	346,456	536,545
Restricted cash included in funds held for clients	2,268,265	1,806,813
Total cash, cash equivalents, restricted cash and restricted cash equivalents, end of period	2,614,721	2,343,358
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid	8,507	11,968
Stock-based compensation for capitalized software	8,797	7,752
Right of use assets obtained in exchange for operating lease liabilities	$ 11,933	$ 16,341

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ 67,970	$ 247,187	$ 64,516	$ 119,296	$ 315,157	$ 183,812

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2024
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	Rule 10b5-1 Trading Arrangements During the quarter ended June 30, 2024, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of the Company adopted, modified, or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (in each case, as defined in Item 408(a) of Regulation S-K).
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false
Rule 10b5-1 Arrangement Modified	false
Non-Rule 10b5-1 Arrangement Modified	false

Organization and Description of Business

6 Months Ended

Jun. 30, 2024

Organization And Description Of Business Abstract

Organization and Description of Business

ORGANIZATION AND DESCRIPTION OF BUSINESS

Summary of Significant Accounting Policies	6 Months Ended
Summary of Significant Accounting Policies	Jun. 30, 2024
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Our significant accounting policies are discussed in “Note 2. Summary of Significant Accounting Policies” in the notes to our audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”) filed with the Securities and Exchange Commission (“SEC”) on February 15, 2024. Basis of Presentation The accompanying unaudited interim consolidated financial statements include the financial results of Software and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding interim financial statements that permit reduced disclosure for interim periods. Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s results for the interim periods presented. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes presented in the Form 10-K. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results expected for the full year. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include income taxes, loss contingencies, the useful life of property and equipment and intangible assets, the life of our client relationships, the fair value of our stock-based awards and the fair value of our financial instruments, intangible assets and goodwill. These estimates are based on historical experience, where applicable, and other assumptions that management believes are reasonable under the circumstances. Actual results could materially differ from these estimates. Seasonality Our revenues are seasonal in nature. Generally, we expect our first and fourth quarter recurring revenues to be higher than other quarters during the year because payroll tax filing forms and Affordable Care Act forms are typically processed in the first quarter, and unscheduled payroll runs (such as bonuses) for our clients are typically concentrated in the fourth quarter. In addition, these seasonal fluctuations in recurring revenues impact operating income. Funds Held for Clients and Client Funds Obligation As part of our payroll and tax filing services, we (i) collect client funds to satisfy their respective payroll and employment tax obligations, (ii) remit such funds to accounts designated by our clients and to the appropriate taxing authorities, as applicable, and (iii) manage client tax filings and any related correspondence with taxing authorities. Amounts collected from clients for their employment taxes are invested by us, and we earn interest on these funds during the interval between receipt and disbursement. These investments are shown in our consolidated balance sheets as funds held for clients, and the associated liability for the tax filings is shown as client funds obligation. The liability is recorded in the accompanying consolidated balance sheets at the time we obtain the funds from clients. The client funds obligation represents liabilities that will be repaid within one year of the consolidated balance sheet date. We typically invest funds held for clients in money market funds, demand deposit accounts, certificates of deposit, commercial paper and U.S. treasury securities. Short-term investments in instruments with an original maturity of less than three months are classified as cash and cash equivalents within funds held for clients in the consolidated balance sheets. Investments in instruments with an original maturity greater than three months are classified as available-for-sale securities and are also included within funds held for clients in the consolidated balance sheets. These available-for-sale securities are recorded at fair value, with the difference between the amortized cost and fair value of these available-for-sale securities recorded as unrealized net gains (losses) on available-for-sale securities, and are included within comprehensive earnings (loss) in the consolidated statements of comprehensive income. Funds held for clients are classified as a current asset in the consolidated balance sheets because the funds are held solely to satisfy the client funds obligation. Additionally, the funds held for clients is classified as restricted cash and restricted cash equivalents and presented within the reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents on the consolidated statements of cash flows. The Company reports the cash flows related to the purchases of investments from funds held for clients and related to the proceeds from the maturities of investments from funds held for clients on a gross basis in the cash flows from investing activities section of the consolidated statements of cash flows. Additionally, the Company reports cash flows related to cash received from and paid on behalf of clients on a net basis within the net change in client funds obligation in the cash flows from financing activities section of the consolidated statements of cash flows. Stock Repurchase Plan In May 2016, our Board of Directors authorized a stock repurchase plan allowing for the repurchase of shares of our common stock in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b5-1 programs. Since the initial authorization of the stock repurchase plan, our Board of Directors has amended and extended and authorized new stock repurchase plans from time to time. In August 2022, our Board of Directors authorized the repurchase of up to $1.1 billion of our common stock over a two-year period expiring on August 15, 2024. As of June 30, 2024, there was $705.9 million available for repurchases under our stock repurchase plan. On July 29, 2024, our Board of Directors increased and extended the stock repurchase plan. See Note 14 for additional information. Our stock repurchase plan may be suspended or discontinued at any time. The actual timing, number and value of shares repurchased depends on a number of factors, including the market price of our common stock, general market and economic conditions, shares withheld for taxes associated with the vesting of equity incentive awards and other corporate considerations. During the six months ended June 30, 2024, we repurchased an aggregate of 589,424 shares of our common stock at an average cost of $158.06 per share, including 68,482 shares withheld to satisfy tax withholding obligations for certain employees upon the vesting of equity incentive awards. Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires incremental disclosures in annual and interim periods related reportable segments, and segment expenses but does not change the definition of a segment, the method for determining segments, or the criteria for aggregating operating segments into reportable segments. This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are assessing the impact of this ASU on our consolidated financial statements and disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information on income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are assessing the impact of this ASU on our consolidated financial statements and disclosures.

Revenue

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenue

REVENUE

Recurring Revenues

Implementation and Other Revenues

Contract Balances

Changes in deferred revenue for the three and six months ended June 30, 2024 and 2023 were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Balance, beginning of period	$	137,039		$	120,802		$	130,469		$	117,416
Recognition of revenue included in beginning of period balance		(10,321	)		(5,507	)		(16,044	)		(10,593	)
Contract balance, net of revenue recognized during the period		15,642			8,938			27,935			17,410
Balance, end of period	$	142,360		$	124,233		$	142,360		$	124,233

We expect to recognize $17.9 million of deferred revenue related to deferred revenue in the remainder of 2024, $23.8 million in 2025, and $100.7 million thereafter.

Assets Recognized from the Costs to Obtain and Costs to Fulfill Revenue Contracts

The following tables present the asset balances and related amortization expense for these contract costs:


	As of and for the three months ended June 30, 2024
	Beginning		Capitalization					Ending
	Balance		of Costs		Amortization			Balance
Costs to obtain a contract	$	396,930	$	15,838	$	(15,808	)	$	396,960
Costs to fulfill a contract	$	440,402	$	35,332	$	(16,010	)	$	459,724

	As of and for the three months ended June 30, 2023
	Beginning		Capitalization					Ending
	Balance		of Costs		Amortization			Balance
Costs to obtain a contract	$	343,991	$	19,937	$	(13,442	)	$	350,486
Costs to fulfill a contract	$	360,588	$	32,514	$	(12,778	)	$	380,324

	As of and for the six months ended June 30, 2024
	Beginning		Capitalization					Ending
	Balance		of Costs		Amortization			Balance
Costs to obtain a contract	$	378,467	$	49,681	$	(31,188	)	$	396,960
Costs to fulfill a contract	$	420,011	$	70,889	$	(31,176	)	$	459,724

	As of and for the six months ended June 30, 2023
	Beginning		Capitalization					Ending
	Balance		of Costs		Amortization			Balance
Costs to obtain a contract	$	325,457	$	51,434	$	(26,405	)	$	350,486
Costs to fulfill a contract	$	338,895	$	66,162	$	(24,733	)	$	380,324

Property and Equipment

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

Property and Equipment

PROPERTY AND EQUIPMENT

Property and equipment and accumulated depreciation and amortization were as follows:


	June 30, 2024			December 31, 2023
Property and equipment
Software and capitalized software development costs	$	432,452		$	371,665
Buildings		259,020			179,874
Computer equipment		186,786			164,856
Rental clocks		45,106			42,364
Furniture, fixtures and equipment		41,353			32,413
Other		19,907			18,500
		984,624			809,672
Less: accumulated depreciation and amortization		(501,813	)		(437,291	)
		482,811			372,381
Construction in progress		15,277			92,020
Land		33,796			33,796
Property and equipment, net	$	531,884		$	498,197

Goodwill and Intangible Assets, Net

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets, Net

GOODWILL AND INTANGIBLE ASSETS, NET


	June 30, 2024
	Weighted Average Remaining			Accumulated
	Useful Life	Gross		Amortization			Net
	(Years)
Intangibles:
Naming rights	12.3	$	60,199	$	(12,040	)	$	48,159
Total		$	60,199	$	(12,040	)	$	48,159


	December 31, 2023
	Weighted Average Remaining			Accumulated
	Useful Life	Gross		Amortization			Net
	(Years)
Intangibles:
Naming rights	12.8	$	60,199	$	(10,087	)	$	50,112
Total		$	60,199	$	(10,087	)	$	50,112

Long-Term Debt

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Long-Term Debt

LONG-TERM DEBT

On November 21, 2023, we fully repaid the outstanding indebtedness under the Revolving Credit Facility. As of June 30, 2024, there was no debt outstanding under the Revolving Credit Facility.

Corporate Investments and Funds Held For Clients

6 Months Ended

Jun. 30, 2024

Investments, Debt and Equity Securities [Abstract]

Corporate Investments and Funds Held For Clients

CORPORATE INVESTMENTS AND FUNDS HELD FOR CLIENTS


	June 30, 2024
Type of issue	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
Cash and cash equivalents	$	346,456	$	—	$	—		$	346,456
Funds held for clients cash and cash equivalents		2,268,265		—		—			2,268,265
Available-for-sale securities(1):
U.S. treasury securities		34,995		—		(101	)		34,894
Total investments	$	2,649,716	$	—	$	(101	)	$	2,649,615

	December 31, 2023
Type of issue	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
Cash and cash equivalents	$	294,025	$	—	$	—		$	294,025
Funds held for clients cash and cash equivalents		2,128,735		—		—			2,128,735
Available-for-sale securities(1):
Certificates of deposit		25,000		—		—			25,000
U.S. treasury securities		174,887		—		(1,256	)		173,631
Total investments	$	2,622,647	$	—	$	(1,256	)	$	2,621,391

(1)

All available-for-sale securities were included within the funds held for clients.


	June 30, 2024
	Securities in unrealized loss position for less than 12 months				Securities in unrealized loss position for greater than 12 months					Total
Type of issue	Gross unrealized losses		Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value
U.S. treasury securities	$	—	$	—	$	(101	)	$	34,894	$	(101	)	$	34,894
Total	$	—	$	—	$	(101	)	$	34,894	$	(101	)	$	34,894


	December 31, 2023
	Securities in unrealized loss position for less than 12 months				Securities in unrealized loss position for greater than 12 months					Total
Type of issue	Gross unrealized losses		Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value
U.S. treasury securities	$	—	$	—	$	(1,256	)	$	173,631	$	(1,256	)	$	173,631
Total	$	—	$	—	$	(1,256	)	$	173,631	$	(1,256	)	$	173,631

Expected maturities of available-for-sale securities at June 30, 2024 are as follows:


Expected maturity	Amortized cost		Fair value
One year or less	$	34,995	$	34,894

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

FAIR VALUE OF FINANCIAL INSTRUMENTS

Our corporate investments consist primarily of money market funds and demand deposit accounts and are classified as cash and cash equivalents on the consolidated balance sheets.

The accounting standard for fair value measurements establishes a three-level fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

•

Level 1 – Observable inputs such as quoted prices in active markets

•

Level 2 – Inputs other than quoted prices in active markets for identical assets or liabilities that are observable either directly or indirectly or quoted prices that are not active

•

Level 3 – Unobservable inputs in which there is little or no market data

Included in the following tables are the Company’s major categories of assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:


	June 30, 2024
	Level 1		Level 2		Level 3		Total
Assets:
U.S. treasury securities	$	—	$	34,894	$	—	$	34,894


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Certificates of deposit	$	—	$	25,000	$	—	$	25,000
U.S. treasury securities	$	—	$	173,631	$	—	$	173,631

Employee Savings Plan and Employee Stock Purchase Plan

6 Months Ended

Jun. 30, 2024

Employee Savings Plan and Employee Stock Purchase Plan

EMPLOYEE SAVINGS PLAN AND EMPLOYEE STOCK PURCHASE PLAN

Earnings Per Share

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Earnings Per Share

10.

EARNINGS PER SHARE

The following is a reconciliation of net income and the shares of common stock used in the computation of basic and diluted earnings per share:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Numerator:
Net income	$	67,970	$	64,516	$	315,157	$	183,812
Denominator:
Basic weighted average shares outstanding		56,451		57,920		56,499		57,895
Dilutive effect of unvested restricted stock and restricted stock units		320		113		49		155
Diluted weighted average shares outstanding		56,771		58,033		56,548		58,050
Earnings per share:
Basic	$	1.20	$	1.11	$	5.58	$	3.17
Diluted	$	1.20	$	1.11	$	5.57	$	3.17

Stock-Based Compensation

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

11.

STOCK-BASED COMPENSATION

The following table summarizes restricted stock awards activity for the six months ended June 30, 2024:



	Time-Based Restricted Stock Awards					Market-Based Restricted Stock Awards
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Unvested shares of restricted stock outstanding at December 31, 2023		904.0		$	293.74		1,745.5		$	124.38
Granted		626.9		$	181.09		187.2		$	164.29
Vested		(204.7	)	$	297.12		—		$	—
Forfeited		(119.8	)	$	280.15		(1,633.3	)(1)	$	111.03
Unvested shares of restricted stock outstanding at June 30, 2024		1,206.4		$	235.98		299.4		$	222.18

(1)

The following table summarizes PSU and RSU activity for the six months ended June 30, 2024:


	RSUs					PSUs
	Units			Weighted Average Grant Date Fair Value Per Unit		Units			Weighted Average Grant Date Fair Value Per Unit
Unvested restricted stock units outstanding at December 31, 2023		9.2		$	300.74		37.2		$	308.05
Granted		48.7		$	187.02		50.5		$	187.34
Vested		(2.9	)	$	297.55		(4.5	)	$	288.77
Forfeited		(31.2	)	$	200.62		(33.0	)	$	215.12
Unvested restricted stock units outstanding at June 30, 2024(1)		23.8		$	199.58		50.2		$	249.52

(1)

A maximum of 89,913 shares could be delivered upon settlement of PSUs based upon the Company’s achievement of the applicable performance goals over the applicable performance periods.

The following table presents the non-cash stock-based compensation expense that is included within the specified line items in our consolidated statements of comprehensive income:


	Six Months Ended June 30,
	2024			2023
Non-cash stock-based compensation expense:
Operating expenses	$	7,154		$	5,738
Sales and marketing		10,296			11,516
Research and development		13,145			11,897
General and administrative		(100,265	)		34,034
Total non-cash stock-based compensation expense	$	(69,670	)	$	63,185


	Restricted Stock		Restricted Stock
	Awards		Units
Unrecognized compensation cost	$	253,523	$	9,670
Weighted average period for recognition (years)		2.7		1.2

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	12. COMMITMENTS AND CONTINGENCIES We are involved in various legal proceedings in the ordinary course of business. Although we cannot predict the outcome of these proceedings, legal matters are subject to inherent uncertainties, and there exists the possibility that the ultimate resolution of these matters could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2024
Income Tax Disclosure [Abstract]
Income Taxes	13. INCOME TAXES The Company’s effective income tax rate was 19.0% and 28.9% for the six months ended June 30, 2024 and 2023, respectively. The lower effective tax rate for the six months ended June 30, 2024 was primarily attributable to the tax benefit related to the forfeiture of the 2020 CEO Performance Award in February 2024.

Subsequent Events	6 Months Ended
Subsequent Events	Jun. 30, 2024
Subsequent Events [Abstract]
Subsequent Events	14. SUBSEQUENT EVENTS On July 29, 2024, our Board of Directors increased and extended the stock repurchase plan, such that $1.5 billion is available for repurchases between July 29, 2024 and August 15, 2026.

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2024
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying unaudited interim consolidated financial statements include the financial results of Software and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding interim financial statements that permit reduced disclosure for interim periods. Intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s results for the interim periods presented. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes presented in the Form 10-K. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results expected for the full year.
Use of Estimates	Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates include income taxes, loss contingencies, the useful life of property and equipment and intangible assets, the life of our client relationships, the fair value of our stock-based awards and the fair value of our financial instruments, intangible assets and goodwill. These estimates are based on historical experience, where applicable, and other assumptions that management believes are reasonable under the circumstances. Actual results could materially differ from these estimates.
Seasonality	Seasonality Our revenues are seasonal in nature. Generally, we expect our first and fourth quarter recurring revenues to be higher than other quarters during the year because payroll tax filing forms and Affordable Care Act forms are typically processed in the first quarter, and unscheduled payroll runs (such as bonuses) for our clients are typically concentrated in the fourth quarter. In addition, these seasonal fluctuations in recurring revenues impact operating income.
Funds Held for Clients and Client Funds Obligation	Funds Held for Clients and Client Funds Obligation As part of our payroll and tax filing services, we (i) collect client funds to satisfy their respective payroll and employment tax obligations, (ii) remit such funds to accounts designated by our clients and to the appropriate taxing authorities, as applicable, and (iii) manage client tax filings and any related correspondence with taxing authorities. Amounts collected from clients for their employment taxes are invested by us, and we earn interest on these funds during the interval between receipt and disbursement. These investments are shown in our consolidated balance sheets as funds held for clients, and the associated liability for the tax filings is shown as client funds obligation. The liability is recorded in the accompanying consolidated balance sheets at the time we obtain the funds from clients. The client funds obligation represents liabilities that will be repaid within one year of the consolidated balance sheet date. We typically invest funds held for clients in money market funds, demand deposit accounts, certificates of deposit, commercial paper and U.S. treasury securities. Short-term investments in instruments with an original maturity of less than three months are classified as cash and cash equivalents within funds held for clients in the consolidated balance sheets. Investments in instruments with an original maturity greater than three months are classified as available-for-sale securities and are also included within funds held for clients in the consolidated balance sheets. These available-for-sale securities are recorded at fair value, with the difference between the amortized cost and fair value of these available-for-sale securities recorded as unrealized net gains (losses) on available-for-sale securities, and are included within comprehensive earnings (loss) in the consolidated statements of comprehensive income. Funds held for clients are classified as a current asset in the consolidated balance sheets because the funds are held solely to satisfy the client funds obligation. Additionally, the funds held for clients is classified as restricted cash and restricted cash equivalents and presented within the reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents on the consolidated statements of cash flows. The Company reports the cash flows related to the purchases of investments from funds held for clients and related to the proceeds from the maturities of investments from funds held for clients on a gross basis in the cash flows from investing activities section of the consolidated statements of cash flows. Additionally, the Company reports cash flows related to cash received from and paid on behalf of clients on a net basis within the net change in client funds obligation in the cash flows from financing activities section of the consolidated statements of cash flows.
Stock Repurchase Plan	Stock Repurchase Plan In May 2016, our Board of Directors authorized a stock repurchase plan allowing for the repurchase of shares of our common stock in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b5-1 programs. Since the initial authorization of the stock repurchase plan, our Board of Directors has amended and extended and authorized new stock repurchase plans from time to time. In August 2022, our Board of Directors authorized the repurchase of up to $1.1 billion of our common stock over a two-year period expiring on August 15, 2024. As of June 30, 2024, there was $705.9 million available for repurchases under our stock repurchase plan. On July 29, 2024, our Board of Directors increased and extended the stock repurchase plan. See Note 14 for additional information. Our stock repurchase plan may be suspended or discontinued at any time. The actual timing, number and value of shares repurchased depends on a number of factors, including the market price of our common stock, general market and economic conditions, shares withheld for taxes associated with the vesting of equity incentive awards and other corporate considerations. During the six months ended June 30, 2024, we repurchased an aggregate of 589,424 shares of our common stock at an average cost of $158.06 per share, including 68,482 shares withheld to satisfy tax withholding obligations for certain employees upon the vesting of equity incentive awards.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires incremental disclosures in annual and interim periods related reportable segments, and segment expenses but does not change the definition of a segment, the method for determining segments, or the criteria for aggregating operating segments into reportable segments. This ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are assessing the impact of this ASU on our consolidated financial statements and disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information on income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are assessing the impact of this ASU on our consolidated financial statements and disclosures.

Revenue (Tables)

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Summary of Changes in Deferred Revenue

Changes in deferred revenue for the three and six months ended June 30, 2024 and 2023 were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Balance, beginning of period	$	137,039		$	120,802		$	130,469		$	117,416
Recognition of revenue included in beginning of period balance		(10,321	)		(5,507	)		(16,044	)		(10,593	)
Contract balance, net of revenue recognized during the period		15,642			8,938			27,935			17,410
Balance, end of period	$	142,360		$	124,233		$	142,360		$	124,233

Summary of Asset Balances and Related Amortization Expense For Contract Costs

The following tables present the asset balances and related amortization expense for these contract costs:


	As of and for the three months ended June 30, 2024
	Beginning		Capitalization					Ending
	Balance		of Costs		Amortization			Balance
Costs to obtain a contract	$	396,930	$	15,838	$	(15,808	)	$	396,960
Costs to fulfill a contract	$	440,402	$	35,332	$	(16,010	)	$	459,724

	As of and for the three months ended June 30, 2023
	Beginning		Capitalization					Ending
	Balance		of Costs		Amortization			Balance
Costs to obtain a contract	$	343,991	$	19,937	$	(13,442	)	$	350,486
Costs to fulfill a contract	$	360,588	$	32,514	$	(12,778	)	$	380,324

	As of and for the six months ended June 30, 2024
	Beginning		Capitalization					Ending
	Balance		of Costs		Amortization			Balance
Costs to obtain a contract	$	378,467	$	49,681	$	(31,188	)	$	396,960
Costs to fulfill a contract	$	420,011	$	70,889	$	(31,176	)	$	459,724

	As of and for the six months ended June 30, 2023
	Beginning		Capitalization					Ending
	Balance		of Costs		Amortization			Balance
Costs to obtain a contract	$	325,457	$	51,434	$	(26,405	)	$	350,486
Costs to fulfill a contract	$	338,895	$	66,162	$	(24,733	)	$	380,324

Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2024

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment and Accumulated Depreciation and Amortization

Property and equipment and accumulated depreciation and amortization were as follows:


	June 30, 2024			December 31, 2023
Property and equipment
Software and capitalized software development costs	$	432,452		$	371,665
Buildings		259,020			179,874
Computer equipment		186,786			164,856
Rental clocks		45,106			42,364
Furniture, fixtures and equipment		41,353			32,413
Other		19,907			18,500
		984,624			809,672
Less: accumulated depreciation and amortization		(501,813	)		(437,291	)
		482,811			372,381
Construction in progress		15,277			92,020
Land		33,796			33,796
Property and equipment, net	$	531,884		$	498,197

Goodwill and Intangible Assets, Net (Tables)

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets


	June 30, 2024
	Weighted Average Remaining			Accumulated
	Useful Life	Gross		Amortization			Net
	(Years)
Intangibles:
Naming rights	12.3	$	60,199	$	(12,040	)	$	48,159
Total		$	60,199	$	(12,040	)	$	48,159


	December 31, 2023
	Weighted Average Remaining			Accumulated
	Useful Life	Gross		Amortization			Net
	(Years)
Intangibles:
Naming rights	12.8	$	60,199	$	(10,087	)	$	50,112
Total		$	60,199	$	(10,087	)	$	50,112

Corporate Investments and Funds Held For Clients (Tables)

6 Months Ended

Jun. 30, 2024

Investments, Debt and Equity Securities [Abstract]

Cash and Cash Equivalents and Investments


	June 30, 2024
Type of issue	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
Cash and cash equivalents	$	346,456	$	—	$	—		$	346,456
Funds held for clients cash and cash equivalents		2,268,265		—		—			2,268,265
Available-for-sale securities(1):
U.S. treasury securities		34,995		—		(101	)		34,894
Total investments	$	2,649,716	$	—	$	(101	)	$	2,649,615

	December 31, 2023
Type of issue	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
Cash and cash equivalents	$	294,025	$	—	$	—		$	294,025
Funds held for clients cash and cash equivalents		2,128,735		—		—			2,128,735
Available-for-sale securities(1):
Certificates of deposit		25,000		—		—			25,000
U.S. treasury securities		174,887		—		(1,256	)		173,631
Total investments	$	2,622,647	$	—	$	(1,256	)	$	2,621,391

(1)

All available-for-sale securities were included within the funds held for clients.

Summary of Unrealized Losses and Fair Values of Available-for-Sale Securities that have been in Unrealized Loss Position for Period of Less than and Greater than 12 Months


	June 30, 2024
	Securities in unrealized loss position for less than 12 months				Securities in unrealized loss position for greater than 12 months					Total
Type of issue	Gross unrealized losses		Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value
U.S. treasury securities	$	—	$	—	$	(101	)	$	34,894	$	(101	)	$	34,894
Total	$	—	$	—	$	(101	)	$	34,894	$	(101	)	$	34,894


	December 31, 2023
	Securities in unrealized loss position for less than 12 months				Securities in unrealized loss position for greater than 12 months					Total
Type of issue	Gross unrealized losses		Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value
U.S. treasury securities	$	—	$	—	$	(1,256	)	$	173,631	$	(1,256	)	$	173,631
Total	$	—	$	—	$	(1,256	)	$	173,631	$	(1,256	)	$	173,631

Summary of Expected Maturities of Available for Sale Securities

Expected maturities of available-for-sale securities at June 30, 2024 are as follows:


Expected maturity	Amortized cost		Fair value
One year or less	$	34,995	$	34,894

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Schedule of Major Categories of Assets and Liabilities Measured at Fair Value on Recurring Basis

Included in the following tables are the Company’s major categories of assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:


	June 30, 2024
	Level 1		Level 2		Level 3		Total
Assets:
U.S. treasury securities	$	—	$	34,894	$	—	$	34,894


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Certificates of deposit	$	—	$	25,000	$	—	$	25,000
U.S. treasury securities	$	—	$	173,631	$	—	$	173,631

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Earnings Per Share

The following is a reconciliation of net income and the shares of common stock used in the computation of basic and diluted earnings per share:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Numerator:
Net income	$	67,970	$	64,516	$	315,157	$	183,812
Denominator:
Basic weighted average shares outstanding		56,451		57,920		56,499		57,895
Dilutive effect of unvested restricted stock and restricted stock units		320		113		49		155
Diluted weighted average shares outstanding		56,771		58,033		56,548		58,050
Earnings per share:
Basic	$	1.20	$	1.11	$	5.58	$	3.17
Diluted	$	1.20	$	1.11	$	5.57	$	3.17

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2024

Summary of Restricted Stock Unit and PSU Activity

The following table summarizes restricted stock awards activity for the six months ended June 30, 2024:



	Time-Based Restricted Stock Awards					Market-Based Restricted Stock Awards
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Unvested shares of restricted stock outstanding at December 31, 2023		904.0		$	293.74		1,745.5		$	124.38
Granted		626.9		$	181.09		187.2		$	164.29
Vested		(204.7	)	$	297.12		—		$	—
Forfeited		(119.8	)	$	280.15		(1,633.3	)(1)	$	111.03
Unvested shares of restricted stock outstanding at June 30, 2024		1,206.4		$	235.98		299.4		$	222.18

(1)

The following table summarizes PSU and RSU activity for the six months ended June 30, 2024:


	RSUs					PSUs
	Units			Weighted Average Grant Date Fair Value Per Unit		Units			Weighted Average Grant Date Fair Value Per Unit
Unvested restricted stock units outstanding at December 31, 2023		9.2		$	300.74		37.2		$	308.05
Granted		48.7		$	187.02		50.5		$	187.34
Vested		(2.9	)	$	297.55		(4.5	)	$	288.77
Forfeited		(31.2	)	$	200.62		(33.0	)	$	215.12
Unvested restricted stock units outstanding at June 30, 2024(1)		23.8		$	199.58		50.2		$	249.52

(1)

A maximum of 89,913 shares could be delivered upon settlement of PSUs based upon the Company’s achievement of the applicable performance goals over the applicable performance periods.

Summary of Non-cash Stock-based Compensation

The following table presents the non-cash stock-based compensation expense that is included within the specified line items in our consolidated statements of comprehensive income:


	Six Months Ended June 30,
	2024			2023
Non-cash stock-based compensation expense:
Operating expenses	$	7,154		$	5,738
Sales and marketing		10,296			11,516
Research and development		13,145			11,897
General and administrative		(100,265	)		34,034
Total non-cash stock-based compensation expense	$	(69,670	)	$	63,185

Summary of Unrecognized Compensation Cost and Related Weighted Average Recognition Period Associated with Unvested restricted Stock Awards and Unvested Restricted Stock Units


	Restricted Stock		Restricted Stock
	Awards		Units
Unrecognized compensation cost	$	253,523	$	9,670
Weighted average period for recognition (years)		2.7		1.2

Summary of Significant Accounting Policies - Additional Information (Detail) - Stock Repurchase Plan [Member]	6 Months Ended
	Jun. 30, 2024 USD ($) $ / shares shares
Summary Of Significant Accounting Policy [Line Items]
Available authorized repurchase amount \| $	$ 705,900,000
Stock repurchase plan expiration period	2 years
Stock repurchase plan expiration date	Aug. 15, 2024
Stock repurchased, average costs per share \| $ / shares	$ 158.06
Repurchases of common stock, shares \| shares	589,424
Certain Employees [Member]
Summary Of Significant Accounting Policy [Line Items]
Shares withheld to satisfy tax withholding obligations \| shares	68,482
Maximum [Member]
Summary Of Significant Accounting Policy [Line Items]
Stock repurchase plan, authorized amount \| $	$ 1,100,000,000

Revenue - Summary of Changes in Deferred Revenue (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Revenue from Contract with Customer [Abstract]
Balance, beginning of period	$ 137,039	$ 120,802	$ 130,469	$ 117,416
Recognition of revenue included in beginning of period balance	(10,321)	(5,507)	(16,044)	(10,593)
Contract balance, net of revenue recognized during the period	15,642	8,938	27,935	17,410
Balance, end of period	$ 142,360	$ 124,233	$ 142,360	$ 124,233

Revenue - Additional Information (Detail)	6 Months Ended
Revenue - Additional Information (Detail)	Jun. 30, 2024
Revenue from Contract with Customer [Abstract]
Deferred revenue expect to recognize description	We expect to recognize $17.9 million of deferred revenue related to deferred revenue in the remainder of 2024, $23.8 million in 2025, and $100.7 million thereafter.

Revenue - Additional Information (Detail 1) $ in Millions	Jun. 30, 2024 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-07-01
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Deferred revenue expect to recognize amount	$ 17.9
Deferred revenue expect to recognize period	6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-01-01
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Deferred revenue expect to recognize amount	$ 23.8
Deferred revenue expect to recognize period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2026-01-01
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Deferred revenue expect to recognize amount	$ 100.7
Deferred revenue expect to recognize period

Revenue - Summary of Asset Balances and Related Amortization Expense For Contract Costs (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Costs to Obtain a Contract [Member]
Capitalized Contract Cost [Line Items]
Beginning Balance	$ 396,930	$ 343,991	$ 378,467	$ 325,457
Capitalization of Costs	15,838	19,937	49,681	51,434
Amortization	(15,808)	(13,442)	(31,188)	(26,405)
Ending Balance	396,960	350,486	396,960	350,486
Costs to Fulfill a Contract [Member]
Capitalized Contract Cost [Line Items]
Beginning Balance	440,402	360,588	420,011	338,895
Capitalization of Costs	35,332	32,514	70,889	66,162
Amortization	(16,010)	(12,778)	(31,176)	(24,733)
Ending Balance	$ 459,724	$ 380,324	$ 459,724	$ 380,324

Property and Equipment - Schedule of Property and Equipment and Accumulated Depreciation and Amortization (Detail) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Property and Equipment [Line Items]
Property and equipment, gross	$ 984,624	$ 809,672
Less: accumulated depreciation and amortization	(501,813)	(437,291)
Property and equipment, net	531,884	498,197
Software And Capitalized Software Development Costs [Member]
Property and Equipment [Line Items]
Property and equipment, gross	432,452	371,665
Buildings [Member]
Property and Equipment [Line Items]
Property and equipment, gross	259,020	179,874
Computer Equipment [Member]
Property and Equipment [Line Items]
Property and equipment, gross	186,786	164,856
Rental Clocks [Member]
Property and Equipment [Line Items]
Property and equipment, gross	45,106	42,364
Furniture, Fixtures and Equipment [Member]
Property and Equipment [Line Items]
Property and equipment, gross	41,353	32,413
Other [Member]
Property and Equipment [Line Items]
Property and equipment, gross	19,907	18,500
Property and Equipment, net, Excluding Land and Construction in Progress [Member]
Property and Equipment [Line Items]
Property and equipment, net	482,811	372,381
Construction in Progress [Member]
Property and Equipment [Line Items]
Property and equipment, net	15,277	92,020
Land [Member]
Property and Equipment [Line Items]
Property and equipment, net	$ 33,796	$ 33,796

Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Property and Equipment [Line Items]
Software development costs capitalized	$ 31,200	$ 22,900	$ 61,000	$ 44,200
Interest and Debt Expense	800	1,500	1,600	2,900
Interest Costs Capitalized	0	900	0	1,400
Depreciation and amortization	19,181	14,927	36,688	29,052
Property and Equipment [Member]
Property and Equipment [Line Items]
Depreciation and amortization	$ 34,600	$ 26,800	$ 66,100	$ 52,100

Goodwill and Intangible Assets, Net - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Jul. 31, 2021	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Line Items]
Goodwill		$ 51,889,000		$ 51,889,000		$ 51,889,000
Goodwill impairment amount				0
Amortization of intangible assets		1,000,000	$ 2,000,000	1,000,000	$ 2,000,000
Estimated remaining amortization expense for remainder of 2024		2,000,000		2,000,000
Estimated remaining amortization expense in 2025		3,900,000		3,900,000
Estimated remaining amortization expense in 2026		3,900,000		3,900,000
Estimated remaining amortization expense in 2027		3,900,000		3,900,000
Estimated remaining amortization expense in 2028		3,900,000		3,900,000
Estimated remaining amortization expense in 2029		3,900,000		3,900,000
Sponsorship Rights [Member]
Goodwill and Intangible Assets Disclosure [Line Items]
One-time payment for intangible asset agreement	$ 1,500,000
Naming Rights [Member] \| Minimum [Member]
Goodwill and Intangible Assets Disclosure [Line Items]
Annual payments for intangible asset agreement				4,000,000.0
Naming Rights [Member] \| Maximum [Member]
Goodwill and Intangible Assets Disclosure [Line Items]
Annual payments for intangible asset agreement				6,100,000
Goodwill [Member]
Goodwill and Intangible Assets Disclosure [Line Items]
Goodwill		$ 51,900,000		$ 51,900,000		$ 51,900,000

Goodwill and Intangible Assets, Net - Schedule of Intangible Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Finite Lived Intangible Assets [Line Items]
Gross	$ 60,199	$ 60,199
Accumulated Amortization	(12,040)	(10,087)
Net	48,159	50,112
Naming Rights [Member]
Finite Lived Intangible Assets [Line Items]
Gross	60,199	60,199
Accumulated Amortization	(12,040)	(10,087)
Net	$ 48,159	$ 50,112
Weighted average remaining useful life	12 years 3 months 18 days	12 years 9 months 18 days

Long-Term Debt - Additional Information (Detail) - USD ($)			6 Months Ended
	Jul. 28, 2023	Jul. 29, 2022	Jun. 30, 2024
Term Loan Facility [Member]
Debt Instrument [Line Items]
Number of draws made	no
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Debt outstanding			$ 0
Revolving Credit Facility [Member] \| Maximum [Member] \| Amendment No. 2 [Mmber]
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 1,000,000
Revolving Credit Agreement [Member]
Debt Instrument [Line Items]
Debt instrument basis spread on variable rate		1.25%
Unamortized debt issuance costs written off	1,200,000
Line of credit facility, maximum borrowing capacity		$ 650,000,000
Unamortized debt issuance cost			$ 3,400,000
Line of credit facility, maturity date		Jul. 29, 2027
Line of credit		$ 29,000,000
Additional credit facility capacity, subject to certain conditions		500,000,000
Line of credit facility, borrowings outstanding		$ 29,000,000
Revolving Credit Agreement [Member] \| Minimum [Member] \| Amendment No. 2 [Mmber]
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 650,000,000
Revolving Credit Agreement [Member] \| Lenders [Member]
Debt Instrument [Line Items]
Line of credit facility agreement date		Jul. 29, 2022
Revolving Credit Agreement [Member] \| Swingline Loans [Member]
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity		$ 25,000,000
Revolving Credit Agreement [Member] \| Letters of Credit [Member]
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity		6,500,000
Revolving Credit Agreement [Member] \| Term Loan Facility [Member]
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity		$ 750,000,000
Line of credit facility, maturity date	Jul. 28, 2023
Revolving Credit Agreement [Member] \| Federal Funds Rate Plus [Member]
Debt Instrument [Line Items]
Debt instrument basis spread on variable rate			0.50%
Revolving Credit Agreement [Member] \| S O F R Plus [Member]
Debt Instrument [Line Items]
Debt instrument basis spread on variable rate			0.10%
Revolving Credit Agreement [Member] \| S O F R Plus One Month Interest Period [Member]
Debt Instrument [Line Items]
Debt instrument basis spread on variable rate			1.00%
Leverage Ratio Is Less Than 1.0 To 1.0 [Member] \| July 2022 Revolving Credit Agreement [Member] \| S O F R Plus [Member]
Debt Instrument [Line Items]
Borrowings basis spread on variable rate			1.25%
Leverage Ratio Is Less Than 1.0 To 1.0 [Member] \| Revolving Credit Agreement [Member]
Debt Instrument [Line Items]
Quarterly commitment fee			0.20%
Leverage Ratio Is Less Than 1.0 To 1.0 [Member] \| Revolving Credit Agreement [Member] \| A B R Loans [Member]
Debt Instrument [Line Items]
Debt instrument basis spread on variable rate			0.25%
Leverage Ratio Is Greater Than Or Equal To One Point Zero To One Point Zero But Less Than Two Point Zero To One Point Zero [Member] \| Revolving Credit Agreement [Member]
Debt Instrument [Line Items]
Quarterly commitment fee			0.225%
Leverage Ratio Is Greater Than Or Equal To One Point Zero To One Point Zero But Less Than Two Point Zero To One Point Zero [Member] \| Revolving Credit Agreement [Member] \| S O F R Plus [Member]
Debt Instrument [Line Items]
Borrowings basis spread on variable rate			1.50%
Leverage Ratio Is Greater Than Or Equal To One Point Zero To One Point Zero But Less Than Two Point Zero To One Point Zero [Member] \| Revolving Credit Agreement [Member] \| A B R Loans [Member]
Debt Instrument [Line Items]
Debt instrument basis spread on variable rate			0.50%
Leverage Ratio Is Greater Than Or Equal To Two Pont Zero To One Point Zero But Less Than Three Point Zero To One Point Zero [Member] \| Revolving Credit Agreement [Member]
Debt Instrument [Line Items]
Borrowings basis spread on variable rate			0.25%
Leverage Ratio Is Greater Than Or Equal To Two Pont Zero To One Point Zero But Less Than Three Point Zero To One Point Zero [Member] \| Revolving Credit Agreement [Member] \| S O F R Plus [Member]
Debt Instrument [Line Items]
Borrowings basis spread on variable rate		1.75%
Leverage Ratio Is Greater Than Or Equal To Two Pont Zero To One Point Zero But Less Than Three Point Zero To One Point Zero [Member] \| Revolving Credit Agreement [Member] \| A B R Loans [Member]
Debt Instrument [Line Items]
Debt instrument basis spread on variable rate			0.75%
Leverage Ratio Is Greater Than Or Equal To Three Point Zero To One Point Zero [Member] \| Revolving Credit Agreement [Member]
Debt Instrument [Line Items]
Borrowings basis spread on variable rate			0.275%
Leverage Ratio Is Greater Than Or Equal To Three Point Zero To One Point Zero [Member] \| Revolving Credit Agreement [Member] \| S O F R Plus [Member]
Debt Instrument [Line Items]
Borrowings basis spread on variable rate			2.00%
Leverage Ratio Is Greater Than Or Equal To Three Point Zero To One Point Zero [Member] \| Revolving Credit Agreement [Member] \| A B R Loans [Member]
Debt Instrument [Line Items]
Debt instrument basis spread on variable rate			1.00%

Corporate Investments and Funds Held For Clients - Cash and Cash Equivalents and Investments (Details) - USD ($)
$ in Thousands

Jun. 30, 2024

Dec. 31, 2023

Jun. 30, 2023

Corporate Investments and Funds Held for Clients [Line Items]

Cash and cash equivalents, amortized cost

$ 346,456

$ 294,025

Funds held for clients cash and cash equivalents, amortized cost

2,268,265

2,128,735

Total investments, amortized cost

2,649,716

2,622,647

Gross unrealized losses

(101)

(1,256)

Cash and cash equivalents, fair value

346,456

294,025

$ 536,545

Funds held for clients cash and cash equivalents, fair value

2,268,265

2,128,735

Total investments, fair value

2,649,615

2,621,391

Available-for-sale Securities [Member] | U.S. Treasury Securities [Member]

Corporate Investments and Funds Held for Clients [Line Items]

Amortized cost

^[1]

34,995

174,887

Gross unrealized losses

^[1]

(101)

(1,256)

Fair value

^[1]

$ 34,894

173,631

Available-for-sale Securities [Member] | Certificates of Deposit [Member]

Corporate Investments and Funds Held for Clients [Line Items]

Amortized cost

^[1]

25,000

Fair value

^[1]

$ 25,000

[1]	All available-for-sale securities were included within the funds held for clients.

Corporate Investments and Funds Held For Clients - Summary of Unrealized Losses and Fair Values of Available-for-Sale Securities that have been in Unrealized Loss Position for Period of Less than and Greater than 12 Months (Details) - Available-for-sale Securities [Member] - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Corporate Investments And Funds Held For Clients [Line Items]
Securities in unrealized loss position for greater than 12 months, Gross unrealized losses	$ (101)	$ (1,256)
Securities in unrealized loss position for greater than 12 months, Fair value	34,894	173,631
Gross unrealized losses	(101)	(1,256)
Fair value	34,894	173,631
U.S. Treasury Securities [Member]
Corporate Investments And Funds Held For Clients [Line Items]
Securities in unrealized loss position for greater than 12 months, Gross unrealized losses	(101)	(1,256)
Securities in unrealized loss position for greater than 12 months, Fair value	34,894	173,631
Gross unrealized losses	(101)	(1,256)
Fair value	$ 34,894	$ 173,631

Corporate Investments and Funds Held For Clients - Additional Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Investments, Debt and Equity Securities [Abstract]
Debt securities, Available-for-sale, Realized Gain (Loss)	$ 0	$ 0
Investment credit impairment losses	$ 0	$ 0

Corporate Investments and Funds Held For Clients - Summary of Expected Maturities of Available for Sale Securities (Details) $ in Thousands	Jun. 30, 2024 USD ($)
Debt Securities, Available-for-Sale, Amortized Cost, Fiscal Year Maturity [Abstract]
Amortized cost, One year or less	$ 34,995
Fair value, One year or less	$ 34,894

Fair Value of Financial Instruments - Schedule of Major Categories of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Certificates of Deposit [Member]
Assets:
Assets		$ 25,000
U.S. Treasury Securities [Member]
Assets:
Assets	$ 34,894	173,631
Level 2 [Member] \| Certificates of Deposit [Member]
Assets:
Assets		25,000
Level 2 [Member] \| U.S. Treasury Securities [Member]
Assets:
Assets	$ 34,894	$ 173,631

Employee Savings Plan and Employee Stock Purchase Plan - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Defined Contribution Plan Disclosure [Line Items]
401(k) minimum age of eligibility for participation			18 years
401(k) eligibility minimum service period			30 days
Employee vested percentage in salary deferrals and roll over contributions			100.00%
Minimum period for vesting 100% contributions				2 years
Minimum period for vesting of discretionary contributions			2 years
Matching contribution	$ 5,400,000	$ 3,800,000	$ 10,000,000	$ 7,800,000
Employee stock purchase plan overlapping offering period			24 months
Compensation expense related to ESPP			$ (69,670,000)	$ 63,185,000
Employee Stock Purchase Plan [Member]
Defined Contribution Plan Disclosure [Line Items]
Employees Company's common stock shares purchase limit percentage	10.00%		10.00%
Employees Company's common stock shares purchase limit amount			$ 25,000
Purchase price of common stock expressed as a percentage of its fair market value			85.00%
Maximum number of shares that may be purchased by a participant			2,000
Share of common stock purchase maximum			2,000,000.0
Purchase of shares of common stock			50,325	35,628
Compensation expense related to ESPP	$ 800,000	$ 900,000	$ 1,700,000	$ 1,800,000
After Two Years Of Employment [Member]
Defined Contribution Plan Disclosure [Line Items]
Matching contributions, vesting percentage			100.00%
One Hundred Percent Match For Percent Of Participants Contribution [Member]
Defined Contribution Plan Disclosure [Line Items]
Employer contribution percentage			100.00%
Percentage of salary deferrals			1.00%
50% Matching Contribution [Member]
Defined Contribution Plan Disclosure [Line Items]
Employer contribution percentage			50.00%
Minimum [Member] \| 50% Matching Contribution [Member]
Defined Contribution Plan Disclosure [Line Items]
Percentage of salary deferrals			2.00%
Maximum [Member]
Defined Contribution Plan Disclosure [Line Items]
Percentage of salary deferrals			3.50%
Maximum [Member] \| 50% Matching Contribution [Member]
Defined Contribution Plan Disclosure [Line Items]
Percentage of salary deferrals			6.00%

Earnings Per Share - Computation of Basic and Diluted Net Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Numerator:
Net income	$ 67,970	$ 247,187	$ 64,516	$ 119,296	$ 315,157	$ 183,812
Denominator:
Basic weighted average shares outstanding	56,451		57,920		56,499	57,895
Diluted weighted average shares outstanding	56,771		58,033		56,548	58,050
Earnings per share:
Earnings per share, basic	$ 1.2		$ 1.11		$ 5.58	$ 3.17
Earnings per share, diluted	$ 1.2		$ 1.11		$ 5.57	$ 3.17
Restricted Stock Units [Member]
Denominator:
Dilutive effect of unvested restricted stock and restricted stock units	320		113		49	155

Stock-Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Non-cash stock-based compensation expense			$ (69,670)	$ 63,185
Capitalized compensation cost			8,797	7,752
Software and Capitalized Software Costs [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Capitalized compensation cost	$ 5,200	$ 4,200	8,800	7,800
Restricted Stock Awards and PSU Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Non-cash stock-based compensation expense				$ 63,200
Capitalized compensation cost			$ 69,700

Stock-Based Compensation - Summary of Restricted Stock Unit and PSU Activity (Detail) - $ / shares

6 Months Ended

Nov. 23, 2020

Jun. 30, 2024

Time-Based Restricted Stock Awards [Member]

Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]

Unvested shares of restricted stock and restricted stock units outstanding at beginning of period

904,000

Restricted Stock Awards and restricted stock units, Granted

626,900

Restricted Stock Awards and restricted stock units, Vested

(204,700)

Restricted Stock Awards and restricted stock units, Forfeited

(119,800)

Unvested shares of restricted stock and restricted stock units outstanding at end of period

1,206,400

Unvested shares of restricted stock and restricted stock units outstanding, Weighted Average Grant Date Fair Value Per Share, at beginning of period

$ 293.74

Granted, Weighted Average Grant Date Fair Value Per Share

181.09

Vested, Weighted Average Grant Date Fair Value Per Share

297.12

Forfeited, Weighted Average Grant Date Fair Value Per Share

280.15

Unvested shares of restricted stock and restricted stock units outstanding, Weighted Average Grant Date Fair Value Per Share, at end of period

$ 235.98

Market-Based Restricted Stock Awards [Member]

Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]

Unvested shares of restricted stock and restricted stock units outstanding at beginning of period

1,745,500

Restricted Stock Awards and restricted stock units, Granted

1,610,000

187,200

Restricted Stock Awards and restricted stock units, Forfeited

^[1]

(1,633,300)

Unvested shares of restricted stock and restricted stock units outstanding at end of period

299,400

Unvested shares of restricted stock and restricted stock units outstanding, Weighted Average Grant Date Fair Value Per Share, at beginning of period

$ 124.38

Granted, Weighted Average Grant Date Fair Value Per Share

164.29

Forfeited, Weighted Average Grant Date Fair Value Per Share

111.03

Unvested shares of restricted stock and restricted stock units outstanding, Weighted Average Grant Date Fair Value Per Share, at end of period

$ 222.18

Restricted Stock Units (RSUs) [Member]

Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]

Unvested shares of restricted stock and restricted stock units outstanding at beginning of period

9,200

Restricted Stock Awards and restricted stock units, Granted

48,700

Restricted Stock Awards and restricted stock units, Vested

(2,900)

Restricted Stock Awards and restricted stock units, Forfeited

(31,200)

Unvested shares of restricted stock and restricted stock units outstanding at end of period

^[2]

23,800

Unvested shares of restricted stock and restricted stock units outstanding, Weighted Average Grant Date Fair Value Per Share, at beginning of period

$ 300.74

Granted, Weighted Average Grant Date Fair Value Per Share

187.02

Vested, Weighted Average Grant Date Fair Value Per Share

297.55

Forfeited, Weighted Average Grant Date Fair Value Per Share

200.62

Unvested shares of restricted stock and restricted stock units outstanding, Weighted Average Grant Date Fair Value Per Share, at end of period

^[2]

$ 199.58

Performance-Based Restricted Stock Units [Member]

Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]

Unvested shares of restricted stock and restricted stock units outstanding at beginning of period

37,200

Restricted Stock Awards and restricted stock units, Granted

50,500

Restricted Stock Awards and restricted stock units, Vested

(4,500)

Restricted Stock Awards and restricted stock units, Forfeited

(33,000)

Unvested shares of restricted stock and restricted stock units outstanding at end of period

^[2]

50,200

Unvested shares of restricted stock and restricted stock units outstanding, Weighted Average Grant Date Fair Value Per Share, at beginning of period

$ 308.05

Granted, Weighted Average Grant Date Fair Value Per Share

187.34

Vested, Weighted Average Grant Date Fair Value Per Share

288.77

Forfeited, Weighted Average Grant Date Fair Value Per Share

215.12

Unvested shares of restricted stock and restricted stock units outstanding, Weighted Average Grant Date Fair Value Per Share, at end of period

^[2]

$ 249.52

[1]

[2]

A maximum of 89,913 shares could be delivered upon settlement of PSUs based upon the Company’s achievement of the applicable performance goals over the applicable performance periods.

Stock-Based Compensation - Summary of Restricted Stock Unit and PSU Activity (Parenthetical) (Detail) - USD ($) $ in Thousands		6 Months Ended
	Nov. 23, 2020	Jun. 30, 2024	Jun. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Allocated Share Based Compensation Expense		$ (69,670)	$ 63,185
Market-Based Restricted Stock Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Number of shares forfeitured	1,610,000	187,200
Allocated Share Based Compensation Expense		$ 117,500
Performance-Based Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Number of shares forfeitured		50,500
Performance-Based Restricted Stock Units [Member] \| Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Units that could be delivered upon settlement of PSUs based upon relative TSR over applicable performance periods		89,913

Stock-based Compensation - Summary of Non-cash Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Non-cash stock-based compensation expense	$ (69,670)	$ 63,185
Operating Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Non-cash stock-based compensation expense	7,154	5,738
Sales and Marketing Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Non-cash stock-based compensation expense	10,296	11,516
Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Non-cash stock-based compensation expense	13,145	11,897
General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Non-cash stock-based compensation expense	$ (100,265)	$ 34,034

Stock-Based Compensation - Summary of Unrecognized Compensation Cost and Related Weighted Average Recognition Period Associated with Unvested restricted Stock Awards and Unvested Restricted Stock Units (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2024 USD ($)
Restricted Stock Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Unrecognized compensation cost	$ 253,523
Weighted average period for recognition (years)	2 years 8 months 12 days
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Unrecognized compensation cost	$ 9,670
Weighted average period for recognition (years)	1 year 2 months 12 days

Income Taxes - Additional Information (Detail)	6 Months Ended
Income Taxes - Additional Information (Detail)	Jun. 30, 2024	Jun. 30, 2023
Income Tax Examination [Line Items]
Effective income tax rate	19.00%	28.90%

Subsequent Events - Additional Information (Detail) - Stock Repurchase Plan [Member] - USD ($)		6 Months Ended
	Jul. 29, 2024	Jun. 30, 2024
Subsequent Event [Line Items]
Stock repurchase plan expiration date		Aug. 15, 2024
Maximum [Member]
Subsequent Event [Line Items]
Stock repurchase plan, authorized amount		$ 1,100,000,000
Subsequent Event [Member]
Subsequent Event [Line Items]
Stock repurchase plan, authorized amount	$ 1,500,000,000
Stock repurchase plan expiration date	Aug. 15, 2026

Paycom Software (NYSE:PAYC)
Gráfica de Acción Histórica
De Jul 2024 a Ago 2024

Haga Click aquí para más Gráficas Paycom Software.

Paycom Software (NYSE:PAYC)
Gráfica de Acción Histórica
De Ago 2023 a Ago 2024

Datos

Noticias

Herramientas

Mercados

Descubrir

Hot Features

Follow Feed

Flujo de Opciones

Monitor

PAYC Paycom Software Inc

Noticias sobre Paycom Software Inc PAYC

Su Consulta Reciente

Empresa

Negocios

Popular

Obtener la aplicación

Tendencias Ahora

Listas Principales

Datos

Noticias

Herramientas

Mercados

Descubrir

Hot Features

Follow Feed

Flujo de Opciones

Monitor

PAYC Paycom Software Inc

Noticias sobre Paycom Software Inc PAYC

Su Consulta Reciente

Empresa

Negocios

Popular

Obtener la aplicación