HR software provider Paycom (NYSE:PAYC) met Wall Street’s revenue expectations in Q4 CY2025, with sales up 10.2% year on year to $544.3 million. On the other hand, the company’s full-year revenue guidance of $2.19 billion at the midpoint came in 1.9% below analysts’ estimates. Its non-GAAP profit of $2.45 per share was in line with analysts’ consensus estimates.

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Revenue: $544.3 million vs analyst estimates of $542.9 million (10.2% year-on-year growth, in line)

Adjusted EPS: $2.45 vs analyst estimates of $2.45 (in line)

Adjusted EBITDA: $236.3 million vs analyst estimates of $231.3 million (43.4% margin, 2.2% beat)

EBITDA guidance for the upcoming financial year 2026 is $960 million at the midpoint, in line with analyst expectations

Operating Margin: 28.9%, down from 30.1% in the same quarter last year

Free Cash Flow Margin: 21.7%, up from 16.2% in the previous quarter

Market Capitalization: $6.86 billion

Pioneering the concept of employees doing their own payroll with its "Beti" technology, Paycom (NYSE:PAYC) provides cloud-based human capital management software that helps businesses manage the entire employment lifecycle from recruitment to retirement.

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Paycom’s sales grew at a decent 19.5% compounded annual growth rate over the last five years. Its growth was slightly above the average software company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. Paycom’s recent performance shows its demand has slowed as its annualized revenue growth of 10.1% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

This quarter, Paycom’s year-on-year revenue growth was 10.2%, and its $544.3 million of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 8.7% over the next 12 months, similar to its two-year rate. This projection is underwhelming and indicates its products and services will see some demand headwinds.

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The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.

Paycom is extremely efficient at acquiring new customers, and its CAC payback period checked in at 13 months this quarter. The company’s rapid recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments.

It was encouraging to see Paycom beat analysts’ EBITDA expectations this quarter. On the other hand, its full-year revenue guidance missed and its revenue guidance for next year suggests a slowdown in demand. Overall, this was a weaker quarter. The stock traded down 7.9% to $109.26 immediately following the results.

The latest quarter from Paycom’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.