Paycom Software hit with six downgrades on lowered FY sales outlook; Shares down 36%
) shares fell more than 35% in pre-market Wednesday after the fintech company reported weaker-than-expected sales for the third quarter and offered lackluster guidance for the current quarter.
The company reported earnings per share of $1.77 on revenue of $406 million, missing the average analyst consensus for earnings of $1.61 on revenue of $411.2 million.Adjusted gross margin contracted 20 basis points year-over-year to 83.7%, while also coming in below the expected 84.4%. “Our third quarter fundamentals were strong with solid revenue and earnings growth,” said Paycom’s founder, chairman and CEO, Chad Richison.
For this quarter, the company sees revenue in the range of $420-425 million. FY revenue is expected between $1.679 billion to $1.684 billion, lower compared to the previous forecast.At least six Wall Street analysts downgraded shares following the guidance cut. An analyst from Oppenheimer downgraded to Perform from Outperform"as the growth profile is expected to deteriorate significantly.
"Paycom has become a transition story and there are challenges looming to reinvigorate its top-line growth since a rebound in the hiring market is unlikely to occur anytime soon given the macro and geopolitical uncertainties and the rate-cycle looks to be ending. This means the business is heading to an average industry growth trajectory and multiples," the analyst wrote."We are downgrading PAYC to Neutral due to revenue deceleration; growth of 10%+ vs.
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