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Is Paycom’s Slowing Growth and Aggressive Buybacks Altering The Investment Case For Paycom Software (PAYC)?

Simply Wall St · 01/05 02:24
  • In recent quarters, Paycom Software reported moderating revenue growth of about 9% guided for 2025 while remaining profitable with ongoing recurring revenue expansion.
  • Management’s decision to repurchase US$223.4 million of stock in the third quarter of 2025 alone underscores a strong capital return focus and internal confidence despite a share price that is still well below its 2021 peak.
  • Next, we’ll examine how Paycom’s aggressive buybacks amid slowing growth may reshape the investment narrative around AI-enabled profitability.

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Paycom Software Investment Narrative Recap

To own Paycom, you need to believe its AI-enabled HR platform can keep recurring revenue, margins and customer retention resilient, even as growth cools. The latest guidance for about 9% revenue growth in 2025, alongside heavy buybacks, does not materially change the near term catalyst around IWant adoption, but it does sharpen the key risk that slower top line momentum could matter more if AI-driven differentiation fades or pricing pressure increases.

Among recent announcements, the US$223.4 million share repurchase in Q3 2025 stands out beside the ongoing US$0.375 quarterly dividend, together signaling a clear capital return focus while revenue growth moderates. For investors, that pairing sits directly against the catalyst of broader AI feature rollout: if IWant and related automation tools can deepen usage and retention, ongoing cash generation may continue to fund both buybacks and dividends without eroding the resources needed for product development.

Yet, despite strong cash returns, investors should be aware that rising AI infrastructure and R&D spending could keep margins under pressure if...

Read the full narrative on Paycom Software (it's free!)

Paycom Software's narrative projects $2.5 billion revenue and $586.5 million earnings by 2028. This requires 8.1% yearly revenue growth and about a $170.8 million earnings increase from $415.7 million today.

Uncover how Paycom Software's forecasts yield a $208.71 fair value, a 37% upside to its current price.

Exploring Other Perspectives

PAYC 1-Year Stock Price Chart
PAYC 1-Year Stock Price Chart

Four fair value estimates from the Simply Wall St Community span roughly US$208.71 to US$415.59, highlighting sharply different views on Paycom’s upside. Set against slowing, high single digit revenue growth and rising AI investment needs, this spread shows why you may want to compare several viewpoints before forming a view on the company’s long term earnings power.

Explore 4 other fair value estimates on Paycom Software - why the stock might be worth over 2x more than the current price!

Build Your Own Paycom Software Narrative

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.