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Paycom’s revenue growth has slowed. But it’s still solid, in the high single digits.
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Management forecasts total revenue growth of around 9% in 2025.
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With the stock well below its 2021 peak, share buybacks are now more important to the thesis.
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10 stocks we like better than Paycom Software ›
Payment software (NYSE: PAYC) It used to trade as the kind of software stock you could buy, forget about, and check back in five years.
But that stability has been altered in recent years. The stock is down about 72% from its all-time high, set in November 2021. The brutal drop has likely rattled shareholders and caused some to move on.
But this begs the question: Is this just a failed story or a high-quality company undergoing a valuation reset? What’s more, is this a buying opportunity?
Paycom sells payroll and human resources (HR) software, and its revenue base is overwhelmingly recurring. In other words, it’s not the type of business where you would typically expect your stock to halve and then halve again.
But the stock’s expensive valuation in 2021 meant the bar had become extremely high.
When a software company is valued for years of smooth, solid growth, any sign of a slowdown can send investors back to the drawing board and reassess whether the stock really deserves to trade at such a high valuation.
Paycom’s slowing growth has ultimately led to a reset in the stock’s valuation.
Sure, the business is growing well, but nowhere near the levels it was growing in 2021. In the third quarter of 2025, revenue increased 9.1% year over year to $493.3 million. This is a far cry from the 30.4% growth the company recorded in the third quarter of 2021.
It’s no surprise that stocks have fallen since 2021. It’s a dramatic slowdown.
Adding to the pressure on the stock recently, even Paycom’s third-quarter 2025 results represented a sequential slowdown, as its 9.1% revenue growth was a slowdown from 10.5% growth in the second quarter.
Still, there’s a lot to like.
First, Paycom’s 9.1% third-quarter top line growth is still good growth. And the company’s recurring revenue growth rate is still in double digits. Paycom’s “recurring and other” revenue in the third quarter increased 10.6% year over year. It accounts for approximately 95% of total revenue, and it’s encouraging to see this important revenue stream continuing to grow at a double-digit rate.
Additionally, the company is doing very well when it comes to profitability trends. Starting with its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin, it increased from 37.9% in the prior-year quarter to 39.4% in the third quarter of 2025. Additionally, Paycom’s non-GAAP earnings per share in the third quarter rose an impressive 16.2% year over year to $1.94.