Affirm stock soars as Q1 earnings smash expectations, guidance lift
Investing.com - Needham maintained its Hold rating on Paycom Software (NYSE:PAYC) following the company’s third-quarter earnings report, citing solid results with accelerating recurring revenue growth. The company, currently trading near its 52-week low with a market cap of $10.33 billion, posted impressive gross profit margins of 86.17% despite its recent stock price decline of nearly 20% over the past year. InvestingPro analysis indicates Paycom is currently undervalued based on its Fair Value assessment.
The firm noted that while Paycom delivered quarterly performance in line with estimates, the company’s fourth-quarter guidance suggests modest sequential revenue growth acceleration, which Needham views as a positive indicator for trends entering 2026. This outlook builds on Paycom’s revenue growth of 10.21% over the last twelve months, with analysts maintaining a consensus recommendation of 2.5.
Needham’s industry research indicates fewer customers are planning to exit Paycom at year-end compared to the previous three years, potentially benefiting the company’s gross revenue retention rate, which is reported annually during fourth-quarter earnings calls.
The research firm highlighted Paycom’s product strategy, which continues to shift toward greater automation, a direction Needham believes will support growth in coming years while enhancing customer retention.
Paycom does not currently provide quarterly guidance, though the company had previously offered insights regarding its growth trajectory for the second half of 2025, according to Needham’s analysis.
In other recent news, Paycom reported its third-quarter 2025 earnings, which showed a slight miss in earnings per share (EPS). The company’s EPS came in at $1.94, just below the forecasted $1.95. However, Paycom’s revenue exceeded expectations, reaching $493.3 million compared to the projected $492.92 million. These figures highlight the company’s ability to generate higher-than-expected revenue despite the minor shortfall in EPS. While the earnings miss might be a point of concern, the revenue performance indicates a positive aspect for investors. This development follows the company’s ongoing efforts to maintain strong financial health. Investors will likely be interested in how Paycom continues to balance its earnings and revenue targets. The company’s financial performance remains a key area of focus for analysts and stakeholders.
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