We have launched coverage of 14 additional enterprise software companies. Our models use a combination of SaaS metrics and non-GAAP financials to predict the current stock price. The relationship with our Enterprise focused model and the current stock prices (adjusted r-square) is 0.87 and for companies with an SMB/Entrepreneur focus our model has an adjusted r-square of 0.68. The performance of these stocks will be tracked in the Perspectec General Portfolio. In addition, we are moving Salesforce.com (CRM) from our Focused Portfolio to our General.Portfolio, due to a change in associate coverage. With this launch, we have published our Enterprise […]
PAYC
4 posts
Examining Paycom (PAYC-NYSE) taking a full ‘retrospective adoption approach’ to adopting the new ASC 606 standard, their restating of adjusted EBITDA has driven us to update our EV/EBITDA forecast model. The new standard allows Paycom to defer a materially larger than industry average portion of their sales commissions over the lifetime of its customers. This has caused adjusted EBITDA for 2017 to now be $186 million versus $137 million previously. Our new function involves seven public payroll SaaS companies that have produced an r-squared of 0.863 in forecasting the current EV/EBITDA multiple. The end result is our target EV/EBITDA multiple for Paycom has been reduced from 45x to 36x. Our […]
Paycom’s Q3 results and Q4 guidance was generally in-line with expectations, with revenue produced per sales person in a mature office increasing 2% Q/Q versus our expectations of 4% Q/Q after accounting for seasonality. EBITDA beat on a greater portion of R&D being capitalized than normal and lower than expected G&A expense due to improving efficiency. The company has joined the 30/30 party (30% Y/Y sales growth and 30% EBITDA margins) with an invitation list of one. Q3/17 Results and Q4/17, 2017 and 2018 Forecasts Source: Perspectec and Company Reports Conservative Guidance: As was the case in each of Paycom’s prior quarters since […]
This is the first in an ongoing series of research pieces examining Paycom (PAYC-NYSE) business and share price. We believe both an absolute and peer enterprise SaaS valuation in relation to Paycom’s growth is the best way to determine whether the stock is a buy or sell. Paycom is an enterprise SaaS company primarily offering payroll software services. It is seeing revenue growth similar to a newer SaaS company, but has revenue churn and profitability closer to more established companies. We also believe tracking the timing of the ramp up of its sales offices and sales teams is important to identifying when […]