Paycom Software Inc (NYSE:PAYC) is facing potential near-term pressure after issuing 2026 revenue guidance that came in below Wall Street forecasts, overshadowing an otherwise steady fourth-quarter performance.
The payroll and HR software provider projected total revenue of $2.185 billion for 2026, implying 6.5% year-over-year growth. That fell short of analyst expectations of $2.225 billion, or roughly 8.5% growth.
Recurring revenue is expected to rise 7.4% in 2026, also below the 9.4% growth anticipated by analysts. The company’s outlook suggests incremental revenue next year will amount to 79% of fiscal 2025’s actual incremental recurring revenue, down from the approximately 97% implied in last year’s guidance.
Fourth-quarter results were broadly in line with projections. Revenue increased 10.2% year over year to $544 million, while recurring revenue climbed 11.3% to $517 million. The annual retention rate improved to 91%, up one percentage point from the prior year.
Adjusted EBITDA totaled $236 million for the quarter, representing a margin of 43.4%—about 0.7 percentage points above consensus estimates. For fiscal 2026, Paycom expects adjusted EBITDA of $960 million, with margins of 43.9%, ahead of Street forecasts of $958 million and a 43.1% margin.
Barclays analysts said shares could come under pressure in the short term, describing the quarter as “okay (not great)” and noting that the below-consensus 2026 outlook may heighten concerns about the company’s growth trajectory.
BMO Capital pointed out that while revenue guidance was softer than expected, Paycom “appears to be going on offense with a major increase in sales capacity and training initiatives,” which could support stronger performance in the second half of 2026.
Jefferies analysts commented that the “disappointing 2026 growth outlook will likely overshadow the results,” despite healthy EBITDA margin projections. They added that although the stock looks inexpensive, the results “largely validate company-specific and industry concerns.”
Management said it expects employment levels to stabilize and sees customer acquisition as the primary lever for growth going forward.