Paycom (PAYC) Q2 2026 Earnings Report

The call conveyed strong operational and financial momentum: double-digit top-line growth in the quarter, robust margin expansion (320 bps YoY to 44.2%), raised full-year adjusted EBITDA guidance (record margin at midpoint), and substantial free cash flow and shareholder returns (~$1.4B repurchased YTD). Product and AI initiatives (Project Arc, IWant, Asset Management, Career & Succession) signal durable product-led growth and longer-term TAM expansion. Primary risks noted were a moderation in full-year revenue growth relative to Q2, increased use of the revolving credit facility to fund buybacks (cash down to $198M), short-term limited contribution from very recent product launches, and sensitivity to interest rate assumptions. Overall, positives around profitability, cash generation, product innovation, and capital returns materially outweighed the identified headwinds.

Paycom raised its 2026 outlook, now expecting total revenues of $2.197–2.212 billion (up 7%–8% year‑over‑year) with recurring and other revenue up 8%–9%; the outlook includes roughly $105 million of interest on funds held for clients (assuming current rates). Full‑year adjusted EBITDA is guided to $1.007–1.022 billion, implying a record adjusted EBITDA margin of about 46% at the midpoint, and management expects free cash flow to exceed $650 million. Additional modeling assumptions and capital allocation metrics disclosed: CapEx around 6% of revenue, GAAP tax rate ~29%, non‑GAAP tax rate ~27%, stock‑based comp ~3% of revenue; the company ended Q2 with ~44 million shares outstanding, repurchased ~2.6 million shares in Q2 (≈6% of shares) for $346 million and nearly 11 million shares year‑to‑date returning ~$1.4 billion, has $1.66 billion remaining on its buyback authorization, paid ~$18 million of dividends in Q2 and the Board approved a $0.375 per‑share quarterly dividend.