How Paycom’s Mixed Q3, CFO Sale and Recurring Revenue Momentum At Paycom Software (PAYC) Has Changed Its Investment Story

• In the past week, Paycom Software reported third-quarter 2025 results that slightly missed earnings per share forecasts but exceeded revenue expectations, while its CFO Robert D. Foster sold 1,300 shares for about US$211,458 and the company presented at Barclays’ Global Technology Conference in San Francisco on December 10.
• Analysts at Needham reinforced their Hold rating after these updates, highlighting accelerating recurring revenue growth and a constructive outlook for Paycom’s performance into the fourth quarter and 2026.
• We’ll now examine how the earnings surprise and Needham’s commentary on recurring revenue growth may reshape Paycom’s existing investment narrative.

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Paycom Software Investment Narrative Recap

To own Paycom, you need to believe its unified HR and payroll platform and AI tools like IWant can keep driving sticky, recurring revenue even as competition in HCM software intensifies. The latest quarter’s slight EPS miss alongside recurring revenue outperformance does not materially change the near term catalyst, which is continued adoption and monetization of its AI driven features, or the key risk that rising AI and infrastructure spending could weigh on margins if usage scales faster than efficiency gains.

The most relevant recent development here is Needham’s reaffirmed Hold rating after Q3 2025, paired with its focus on accelerating recurring revenue growth. That external read-through matters because Paycom’s core catalyst is the platform’s ability to convert AI powered engagement into durable, subscription like revenue, especially as the company keeps investing heavily in infrastructure and R&D while absorbing a weaker share price and ongoing buybacks.

Yet while recurring revenue momentum looks encouraging, investors still need to be aware of how sustained AI infrastructure spending could...

Read the full narrative on Paycom Software (it's free!)

Paycom Software's narrative projects $2.5 billion revenue and $586.5 million earnings by 2028. This requires 8.1% yearly revenue growth and about a $170.8 million earnings increase from $415.7 million today.

Uncover how Paycom Software's forecasts yield a $209.94 fair value, a 26% upside to its current price.

Exploring Other Perspectives

Four members of the Simply Wall St Community currently see Paycom’s fair value between about US$209.94 and US$377.56, highlighting very different expectations. As you weigh those views, keep in mind that the key catalyst many are watching is whether Paycom’s AI products can truly translate into durable recurring revenue growth in a market where switching costs may be falling.

Explore 4 other fair value estimates on Paycom Software - why the stock might be worth over 2x more than the current price!

Build Your Own Paycom Software Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Paycom Software research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Paycom Software research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Paycom Software's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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