Paycom Software — Income Statement, Cash Flows & Balance Sheet
Is Paycom profitable?
Paycom is solidly profitable, but net income dipped in 2025 despite healthy revenue growth.
| Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Total revenues ($M) | $1,883.2 | $2,051.7 | +9.0% |
| Operating income ($M) | $634.3 | $567.2 | -10.6% |
| Net income ($M) | $502.0 | $453.4 | -9.7% |
| Operating margin | 33.7% | 27.7% | -6.0 pp |
Revenue grew at a healthy clip, but profits fell because operating expenses — particularly general and administrative costs — jumped significantly. A large part of the G&A increase was $118.7 million in stock-based compensation expense in 2025, compared to a net benefit of $22.9 million in 2024 (which was itself distorted by a one-time $117.5 million reversal when the CEO forfeited a large restricted stock award). Stripping out these swings, the underlying business remains comfortably profitable.
A one-time gain partially cushioned the earnings decline.
| Item | 2024 | 2025 | Change |
|---|---|---|---|
| Other income, net ($M) | $18.1 | $55.6 | +$37.5 |
Paycom recognized a $35.6 million gain in 2025 from amending its naming rights agreement for an Oklahoma City arena, which significantly boosted "other income." Without this gain, pre-tax income would have looked notably weaker, so it is worth treating that line with caution when thinking about ongoing earnings power.
Does Paycom generate cash?
Paycom's operating cash generation improved meaningfully in 2025.
| Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Net cash from operations ($M) | $533.9 | $678.9 | +27.1% |
| Capital expenditures ($M) | $(192.9) | $(270.9) | +40.4% |
| Free cash flow (GAAP: operating minus capex) ($M) | $341.0 | $408.0 | +19.6% |
Operating cash flow outpaced net income comfortably, helped by large non-cash charges like depreciation and deferred taxes. Capital spending rose sharply, driven by continued investment in software development and infrastructure, but free cash flow still expanded year over year.
Paycom returned significant cash to shareholders while continuing to invest.
| Item | 2024 | 2025 | Change |
|---|---|---|---|
| Share repurchases ($M) | $(122.8) | $(325.5) | +165% |
| Dividends paid ($M) | $(84.8) | $(84.8) | Flat |
The company nearly tripled its share buyback spending compared to the prior year, reflecting the Board's $1.5 billion repurchase authorization. Combined with dividends, Paycom returned more cash to shareholders in 2025 than it generated in free cash flow — a notable acceleration in capital return.
How strong is Paycom's balance sheet?
Paycom carries no long-term debt and holds a healthy cash cushion.
| Item | Dec 31, 2024 | Dec 31, 2025 | Change |
|---|---|---|---|
| Cash & equivalents ($M) | $402.0 | $370.0 | -$32.0 |
| Long-term debt ($M) | $0 | $0 | — |
| Total stockholders' equity ($M) | $1,575.9 | $1,731.5 | +$155.6 |
Paycom fully repaid its revolving credit facility in late 2023 and has carried zero debt since. The company still has access to a $1.0 billion revolving credit facility if needed. With equity growing and no debt obligations, the balance sheet is in strong shape.
The large "funds held for clients" line is not a risk — it is matched dollar-for-dollar by an offsetting liability.
| Item | Dec 31, 2024 | Dec 31, 2025 | Change |
|---|---|---|---|
| Funds held for clients ($M) | $3,665.5 | $5,137.0 | +$1,471.5 |
| Client funds obligation ($M) | $3,665.7 | $5,137.0 | +$1,471.3 |
The balance sheet looks much larger than the core business because Paycom temporarily holds client payroll and tax funds before remitting them. These assets and liabilities are perfectly matched and represent a pass-through — they do not affect Paycom's financial health, but they do earn Paycom interest income while the funds are held.