Paycom Software (PAYC) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue reached $531.2 million, up 9.8% year-over-year, driven by broad-based demand, new clients, expanded services, and pricing strategies.

• GAAP net income was $107.4 million ($2.34 per diluted share), up 20% from the prior year, with non-GAAP net income at $127.7 million ($2.78 per share).

• Adjusted EBITDA was $235 million, with a 44.2% margin, reflecting a 320 basis point year-over-year expansion.

• Major new products launched, including career and succession planning and Asset Management, with Project Arc marking the largest system-wide release and enhancing scalability and performance.

• Continued focus on automation and AI, with industry recognition for innovation, client satisfaction, and workplace excellence.

Financial highlights

• Recurring and other revenues grew 11% year-over-year to $505.2 million; interest on funds held for clients declined 8.5% due to lower rates.

• Diluted EPS for Q2 2026 was $2.34, up from $1.58 in Q2 2025.

• Adjusted gross margin for Q2 was 83.6%, up from 83.2% last year.

• Free cash flow for the first half of 2026 was $372.7 million, with a margin of 33.8%; full-year free cash flow expected to exceed $650 million.

• Total operating expenses decreased 2.3% year-over-year, mainly from lower headcount and employee-related costs.

Outlook and guidance

• Full-year 2026 revenue guidance raised to $2.197–$2.212 billion (7–8% growth); recurring and other revenue expected to grow 8–9%.

• Adjusted EBITDA guidance increased to $1.007–$1.022 billion, with a record margin of 46% at midpoint.

• Interest on funds held for clients projected at $105 million, assuming stable rates.

• Guidance assumes stable client employment growth and no significant rate changes for the remainder of the year.

• Research and development expenses are expected to be lower in 2026 due to reduced headcount.