Paycom Speeds Up Growth Investments Despite Coronavirus
With unemployment hitting highs not seen since the early 1940s, it's not surprising that payroll processor and HR software specialist Paycom (NYSE: PAYC) had a rough quarter. But savvy investors looking behind the headlines are noting encouraging signs that its slowing growth is more of a head cold than a life-threatening disease. Let's review the most recent results and look at why investors shouldn't give up on this growth stock just yet.
As the coronavirus drove many small businesses to cut staff or shut down, tens of millions filed for unemployment benefits. Paycom's customers, businesses that have between 500 and 5,000 employees, weren't immune to these widespread impacts. Fewer employees on the books and less payroll activity definitely put a damper on the company's second-quarter revenue growth. The top line expanded, but only a tepid 7%, to hit $182 million. This growth was significantly less than its 21% top-line gains posted in Q1 and a far cry from its 2019 full-year increase of 30% over 2018. Gross margins remained within a percentage point of the previous year's at a solid 84%, but the bottom line was a different story altogether.
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Source Fool.com
