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While most software companies were retreating, Paycom made an aggressive and unconventional bet on itself, and the market delivered a verdict that caught even seasoned analysts off guard.

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Paycom Software (NYSE:PAYC | PAYC Price Prediction) spent the first half of 2026 doing what most software companies stopped doing: buying its own stock while everyone else was selling.

Buyback By The Numbers Paycom retired roughly 20% of its shares in eight months. The share count fell from 56.1 million at the end of 2025 to about 45.1 million today, and the company did most of that buying while the stock was near a 52-week low of $104.15. In the first six months of 2026, Paycom repurchased nearly 11 million shares for approximately $1.4 billion. That is a company betting on itself at the low.

What It Means Context matters here. Paycom spent $325.5 million on share repurchases in all of fiscal 2025. The 2026 pace is a different animal. In Q1 alone, the company bought back 8,375,443 shares for $1.060 billion and authorized a new $2.00 billion buyback. Q2 added another 2.6 million shares for $346 million, or about 6% of shares outstanding in a single quarter. Management called the repurchases opportunistic, citing a “valuation disconnect” in the market.

The funding is the part long-term holders need to see clearly. Paycom drew $900 million on its $2.1 billion revolving credit facility to support the year-to-date repurchases. Cash and equivalents ended Q2 at $198 million. This was a leveraged buyback funded partly with credit, and the balance sheet reflects that: stockholders’ equity fell to $571.5 million in Q2, down 68.28% year over year because of treasury stock accumulation.

Underneath the buyback, the operating business gave management cover. Q2 revenue was $531 million, up 10%, with recurring revenue of $505 million, up 11% year-over-year. Non-GAAP EPS came in at $2.78, ahead of the $2.381 consensus. Adjusted EBITDA margin expanded 320 basis points to 44.2%. Management raised full-year revenue guidance to $2.197 billion to $2.212 billion and adjusted EBITDA to $1.007 billion to $1.022 billion, implying a record 46% margin at the midpoint.

Market Reaction Paycom stock rose 98.81% between April 1, 2026 and August 31, 2026, from $120.26 to $239.10, with a 46.07% move in August alone. At the Q1 earnings 8-K filing on May 6, 2026, shares were $126.1438. By the Q2 filing on August 5, 2026, they closed at $175.00. The stock now trades above the $211.56 average analyst target, with 6 buy and 14 hold ratings and no sells. Zoom out and the picture is more sober: the stock is still down 50.07% over the last five years, from $478.83 on September 1, 2021.

Bull Case The buyback is a bet the market already validated. Oakmark Select portfolio manager Robert Bierig named Paycom on CNBC on September 1, 2026, saying: “Another example would be Paycom, which is a payroll software company that is buying back 20% of its shares this year. So we think they’re also very much a durable business that is going to benefit from some of the technology changes that are taking off right now.” Bierig also pushed back on the AI-loser framing: “I think people have wanted to put all of software into like an AI loser bucket. And we are big believers in the power of AI, but we think software companies can succeed at the same time.”

The operating case supports the capital allocation. Paycom cut R&D expense from $74.8M to $51.9M, largely because it moved AI workloads in-house. The company spent over $100 million last year preparing its own data centers, and management expects roughly $100 million in R&D savings this year plus $30 million or more from IWant response fees that would have gone to a third party. CEO Chad Richison said Paycom is “well positioned to exceed our initial 2026 plan on both a revenue and profitability basis.” Free cash flow is expected to exceed $650 million for the year. Retiring 20% of the float against that cash profile compounds every future dollar of earnings across a smaller share base.

Bottom Line Paycom bought its own stock at the bottom of a software panic, funded partly with debt, and the stock nearly doubled. For long-term holders, the forward catalyst is the raised guidance: $1.007 billion to $1.022 billion in adjusted EBITDA against a share count that is roughly 20% smaller than it was on New Year’s Day. The stock now sits above the average analyst target, and the analyst desk skews to hold. The buyback is the reason the story worked. Whether it keeps working depends on how the credit line gets paid back, and how quickly the automation savings show up in the 2027 numbers.

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3 Stocks That Benefit if Companies Cut Costs in 2026Paycom Software NYSE: PAYC reported second-quarter results that exceeded its expectations, citing broad-based revenue strength, growing demand for automation and improving operating efficiency. The company also raised its full-year revenue and adjusted EBITDA outlook.

Total revenue rose 10% year over year to $531 million in the second quarter, while recurring and other revenue increased 11% to $505 million. GAAP net income climbed 20% to $107 million, or $2.34 per diluted share. On a non-GAAP basis, net income was $128 million, or $2.78 per diluted share.

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3 Explosive Tech Stocks Breaking Out Right Now Adjusted EBITDA totaled $235 million, producing a 44.2% margin, up 320 basis points from a year earlier. CFO Bob Foster said the company’s automation efforts and use of its own technology are increasing productivity across the business and supporting sustainable margin expansion.

Full-Year Outlook Raised Following its first-half performance, Paycom increased its 2026 guidance. The company now expects total revenue of $2.197 billion to $2.212 billion, representing growth of 7% to 8% from 2025. It expects recurring and other revenue to rise 8% to 9% for the full year.

PayPal’s User Decline Won’t Stop Its Double-Digit UpsideThe outlook includes approximately $105 million of interest on funds held for clients and assumes current interest rates remain in place for the rest of the year. Foster said that even if rates moved higher or lower, the impact on 2026 would be minimal.

Paycom now forecasts full-year adjusted EBITDA of $1.007 billion to $1.022 billion, implying a record 46% adjusted EBITDA margin at the midpoint of the range. Foster also said the company expects free cash flow to exceed $650 million in 2026.

Asked about the improved cash-flow outlook, Foster pointed to broad-based efficiencies in processes and labor. He said the company had been working to bring EBITDA margins and free-cash-flow margins closer together and views the progress as sustainable.

Product Releases Focus on Automation and AI Founder and CEO Chad Richison said Paycom’s full-solution automation and service model continue to drive client return on investment. He said demand for automation is increasing and that the company is expanding its capabilities through artificial intelligence and automated decisioning.

During the year, Paycom introduced a career and succession planning solution designed to help organizations identify talent gaps, assess readiness and develop potential successors. Richison said client adoption has been solid.

In July, the company launched Asset Management, a product that enables businesses to track and manage physical and digital assets. Richison said the offering expands Paycom into what he described as a new multibillion-dollar total addressable market and represents the company’s 45th product developed, hosted, distributed and serviced during its nearly 28-year history.

President Shane Hadlock highlighted Project Arc, which he called Paycom’s largest system-wide release. The update added customization features intended to give users more tailored views of information and action items, while also improving performance and scalability. Hadlock cited one client with more than 10,000 employees that reported system performance had increased fourfold.

Hadlock also discussed Paycom’s AI offering, I Want, which automates events and tasks within the system. Richison said I Want is frequently the first interaction new employees have with Paycom’s platform and emphasized that the company’s focus is on providing accurate responses rather than deploying AI solely for its own sake.

Sales Capacity, Bookings and Client Demand Richison said second-quarter revenue strength was broad-based and did not stem from one-time factors. Products launched last year are beginning to contribute to results, while the more recently released career and succession planning and Asset Management products are expected to contribute more in future periods.

He said bookings came in as expected during the quarter. Paycom’s sales include both sales to new prospects and sales to existing customers, though the company has also implemented in-app purchasing capabilities that can bypass the traditional booked-sales process for certain products.

Management said Paycom’s sales pipeline remains strong and that new sales representatives are reaching productivity faster than they have historically. Richison said the company has expanded teams from eight to 10 representatives and has added more than 100 new sales representatives. Existing representatives are expected to remain more productive in the near term, while the larger new-representative cohort is expected to support future booked sales as it develops.

The company said client employment growth remained stable during the first half, consistent with levels seen in recent years outside of the COVID-19 period.

Capital Returns and Balance Sheet Paycom repurchased approximately 2.6 million shares, or about 6% of shares outstanding, for $346 million during the second quarter. Over the first six months of 2026, the company repurchased nearly 11 million shares for approximately $1.4 billion, reducing shares outstanding by 20%.

Paycom ended the quarter with roughly 44 million shares outstanding and $1.66 billion remaining under its repurchase authorization. The company also paid approximately $18 million in cash dividends during the quarter. Its board approved a quarterly dividend of $0.375 per share on Aug. 3, payable in early September.

At quarter-end, Paycom had $198 million in cash and cash equivalents. It had drawn $900 million on its $2.1 billion revolving credit facility to support year-to-date repurchases. Average daily funds held for clients rose 9% year over year to approximately $2.9 billion.

About Paycom Software (NYSE:PAYC)Paycom Software, Inc NYSE: PAYC is a cloud-based human capital management (HCM) software provider that delivers an end-to-end solution for human resources, payroll, talent acquisition, time and labor management, and talent management. Its single-database platform enables organizations to process payroll, track time, administer benefits, and manage recruiting and employee development through a unified system. Paycom's software is designed to streamline administrative tasks, improve data accuracy, and provide real-time reporting and analytics to support strategic HR decisions.

The company's core offerings include payroll processing with built-in tax compliance, employee self-service functionality, automated time tracking, and customizable talent acquisition tools that allow employers to create and post job requisitions, screen candidates, and conduct onboarding electronically.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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Aug 5 (Reuters) - Payroll processor Paycom (PAYC.N), opens new tab on Wednesday lifted its annual revenue forecast, driven ​by steady demand for its ‌AI-driven employee management services.

Shares of the company were up 15.1% in extended trading ​following the results.

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Here are some details:

Paycom, ​which offers a broad product suite ⁠and tools helping employers track ​and manage workforce tasks, has been integrating ​AI features into its software.

The company expects full-year 2026 revenue of $2.197 billion to $2.212 billion, above ​its previous forecast of $2.175 billion ​to $2.195 billion.

Integration of AI into its services has ‌boosted ⁠demand for Paycom's services, as businesses look to simplify workforce management functions.

The company offers employee-focused tools such as Beti, ​GONE and ​IWant.

It ⁠reported revenue of $531.2 million for the quarter ended June ​30, ahead of analysts' average ​estimate ⁠of $513.1 million, according to data compiled by LSEG.

Human capital management vendors such as Automatic Data ⁠Processing (ADP.O), opens new tab, ​Workday (WDAY.O), opens new tab and Paychex (PAYX.O), opens new tab ​are among the major competitors of Paycom.

Reporting by ​Arunesh Sinha in Bengaluru; Editing by Shreya Biswas

Our Standards: The Thomson Reuters Trust Principles., opens new tab