Paycom Software FY 2025 Margin Compression Tests Bullish Long Term Narratives

Paycom Software FY 2025 earnings snapshot

Paycom Software (PAYC) has wrapped up FY 2025 with fourth quarter revenue of US$544.3 million and basic EPS of US$2.07, alongside trailing twelve month revenue of about US$2.1 billion and basic EPS of US$8.13. The company has seen quarterly revenue move from US$451.9 million in Q3 2024 to US$544.3 million in Q4 2025, while basic EPS stepped from US$1.31 to US$2.07 over the same stretch. This sets up the latest report as a clean read on how its margins are holding up.

See our full analysis for Paycom Software.

With the headline numbers on the table, the next step is to see how this earnings profile lines up against the prevailing stories around Paycom’s growth, profitability and risk that investors have been debating over the past year.

See what the community is saying about Paycom Software

Margins ease from 26.7% to 22.1%

• On a trailing twelve month basis, Paycom’s net margin is 22.1% compared with 26.7% a year earlier, alongside TTM net income of US$453.4 million on US$2.1b of revenue.
• Bears focus on this margin compression and the negative year over year earnings trend, yet
  • five year earnings growth of 23.1% per year points to a much stronger longer term record than the latest 12 month snapshot,
  • and automation tools like Beti and IWant are cited as supporting adjusted EBITDA margins near 43%, which challenges the idea that profitability cannot be supported over time.

Over 20% margins paired with automation gains are exactly what skeptics debate in the detailed bear case for Paycom, and that breakdown can help you see which risks matter most right now. 🐻 Paycom Software Bear Case

US$2.1b TTM revenue with mixed earnings trend

• Trailing twelve month revenue sits at about US$2.1b with TTM EPS of US$8.13, while quarterly EPS ranged from US$1.59 to US$2.49 across FY 2025 and TTM earnings are flagged as down year over year.
• Bullish investors argue that broad adoption of AI tools such as IWant across the full client base and less than 5% penetration of the stated US market can underpin revenue and earnings over time, yet
  • the FY 2025 quarterly pattern, with EPS between roughly US$1.59 and US$2.49 and TTM net income of US$453.4 million, shows earnings are currently more modest than the bullish narrative that points to US$638.0 million by around 2029,
  • so the present mixed earnings trend gives you a concrete reference point to compare against those higher future earnings assumptions.

Bulls point to AI rollout, automation and a still largely untapped market as the reasons they see more upside in Paycom over time, and you can walk through that full case in detail here: 🐂 Paycom Software Bull Case

P/E of 14.5x and DCF fair value gap

• With a share price of US$119.76 and a P/E of 14.5x, Paycom trades below the cited US Professional Services industry average of 19.7x and peer average of 18.3x, and the stock is also described as about 61.9% below a DCF fair value of roughly US$314.13.
• What stands out for the bearish narrative is the tension between this discount and softer recent fundamentals, because
  • the trailing year shows negative earnings growth and net margin stepping down from 26.7% to 22.1%, which bears see as a reason the share price could stay tied to lower multiples,
  • while the cited revenue growth forecast of about 6.7% a year and earnings growth of roughly 9% a year are less aggressive than the bullish assumptions used to back higher price targets, leaving investors to weigh current valuation metrics against these more measured growth expectations.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Paycom Software on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

See the numbers differently? Take a fresh look at the data, shape your own view in a few minutes, and share it with the community: Do it your way

A great starting point for your Paycom Software research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

See What Else Is Out There

Paycom’s softer year over year earnings, easing net margins and more modest growth forecasts highlight that its recent financial profile is not lining up cleanly with bullish expectations.

If that gap between story and numbers makes you cautious, compare this setup with 85 resilient stocks with low risk scores so you can quickly focus on companies where recent fundamentals look steadier.

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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