--- title: "Paycom beat every line, then spent $1.39 billion on buybacks while carrying $750 million of debt" description: "Paycom beat every line and raised its 2026 outlook, but the filing shows a debt-free balance sheet became a $750 million leveraged one in nine months, funding buybacks that shrank the share count by 19% while R&D was halved." publisher: "The Inference" section: "Applications" published: 2026-11-05T14:12:42.425Z modified: 2026-11-05T14:12:42.425Z canonical: https://theinference.org/article/paycom-beat-every-line-then-spent-1-39-billion-on-buybacks-while-carrying-750-million-of-debt language: en keywords: "Paycom, Earnings, Buybacks, Debt, Software" --- # Paycom beat every line, then spent $1.39 billion on buybacks while carrying $750 million of debt > Paycom beat every line and raised its 2026 outlook, but the filing shows a debt-free balance sheet became a $750 million leveraged one in nine months, funding buybacks that shrank the share count by 19% while R&D was halved. ## Paycom beat everything, and the stock fell anyway [Paycom](https://theinference.org/markets/companies/paycom) Software, the Oklahoma City payroll and HR software company founded by Chad Richison, [reported third-quarter results](https://www.bullished.co/paycom-adjusted-ebitda-margin-reaches-49-and-full-year-outlook-rises-3f1feaf3/) on Wednesday November 4, 2026, that cleared every bar: revenue up 10.2% to $543.8 million, adjusted EPS of $3.37 about 20% above the $2.80 analysts expected, adjusted EBITDA of $268.1 million against a consensus of $235.7 million, and a raised full-year outlook [1][3]. Richison credited the "tremendous ROI" clients get from the platform's automated decisioning and said the company was "once again raising our full-year outlook" [1]. Shares still fell 4.8% to $254.90 after the release [3]. The reason was not the income statement. It was two pages further in. ## The debt did not exist a year ago The release shows Paycom drew $900.0 million on its credit facility this year, spent $1,390.9 million buying back stock in nine months against $218.9 million a year earlier, and carried long-term debt of $750.0 million at September 30, against none at the end of 2025 [1]. Shares outstanding dropped from 54.8 million in December to 44.3 million by September 30, about 19%, and diluted shares in the quarter fell to 44.5 million from 56.4 million [1][2]. Cash fell to $193.9 million from $370.0 million; stockholders' equity shrank to $707.3 million from $1,731.5 million [1]. Operating income rose 74%, but most of the jump in earnings per share is arithmetic on a shrinking denominator, not growth in the business [1]. ## The margin was partly manufactured The 49.3% adjusted EBITDA margin, up from 39.4% a year earlier, was fed from the cost side too: research and development expense was cut to $38.5 million from $74.1 million, capitalized development costs to $17.4 million from $43.5 million, and stock-based pay to $20.3 million from $31.1 million [1]. Paycom's own [filing history](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001590955) shows the squeeze started earlier: R&D expense fell 30.6% year on year in the second quarter of 2026, after years of double-digit increases [5]. *Chart: **Paycom cut R&D expense by nearly half in five quarters** Line of Paycom quarterly R&D expense from Q3 2024 to Q3 2026, rising to $74.8 million in Q2 2025 then falling to $38.5 million in Q3 2026* *Quarterly R&D expense in millions of dollars, as reported in Paycom's SEC filings. [5][1]* ## The buybacks ran ahead of the cash Free cash flow for the nine months rose to $536.5 million from $285.4 million, a genuinely strong number [1]. It is also less than half the $1,390.9 million of stock repurchased [1], and the gap tracks the $900.0 million drawn on the credit facility [1]. On November 5 the company [added a first cash dividend of $0.375 per share](https://finance.yahoo.com/markets/stocks/articles/paycom-software-payc-declares-first-072151843.html), its first ever [4], on top of the buyback and the $750 million of debt [1]. *Chart: **Buybacks ran at more than double free cash flow this year** Column chart comparing Paycom's stock repurchases and free cash flow for the first nine months of 2025 and 2026, with buybacks jumping from $218.9 million to $1,390.9 million while free cash flow rose from $285.4 million to $536.5 million* *Nine-month stock repurchases against nine-month free cash flow, in millions of dollars, from Paycom's third-quarter 2026 release. [1]* ## The bull case, stated fairly The other side has real evidence. Recurring revenue is 95.5% of sales, the customer acquisition payback period is 12 months, billings grew 10.1% to $544.7 million, and full-year EBITDA guidance of about $1.07 billion sits well above consensus [1][2][3]. Richison's pitch is that a mature, seat-priced payroll business should return cash, and Dealroom notes the raise [ranks near the 90th percentile of post-IPO software debt deals](https://dealroom.co/news/169777-paycom-taps-750m-debt-for-buybacks-as-growth-cools-to-single-digits/) [2]. Fair. But guidance implies about 8% growth for 2026, down from 17.2% compounded annually over the past five years, and sell-side analysts project 6.3% over the next twelve months [1][3]. The market has already priced this trade-off once this week: [HubSpot](https://theinference.org/markets/companies/hubspot), the marketing-software company, beat on EPS and widened its margin and still fell 4.2% to $207.05 when its [next-quarter revenue guidance came in below consensus](https://www.msn.com/en-us/news/other/hubspot-nysehubs-posts-better-than-expected-sales-in-q3-2026-but-quarterly-revenue-guidance-misses-expectations/ar-AA2gLxJg) [6]. ## The lever has less room to run Earnings per share is growing faster than the business underneath it, and $750 million of debt now sits under a company guiding to 8% revenue growth [1]. Watch the 2027 guidance in the fourth-quarter release and the dividend's first full quarters: if revenue growth stays near 8% while interest and payouts come due, the share-count lever has less room to run [1]. *Chart: **Revenue growth has hovered in single or low double digits for two years** Column chart of Paycom's year-on-year quarterly revenue growth from Q3 2024 to Q2 2026, fluctuating between 6.1% and 13.6%* *Year-on-year revenue growth by quarter, in percent, as reported in Paycom's SEC filings. [5]* ## Takeaway Paycom's beat is real, but a 19% smaller share count, halved R&D and a new $750 million of debt mean earnings per share is running well ahead of the business underneath it. ## Sources 1. [Bullished, Paycom Adjusted EBITDA Margin Reaches 49% And Full-Year Outlook Rises (PAYC), 5 November 2026](https://www.bullished.co/paycom-adjusted-ebitda-margin-reaches-49-and-full-year-outlook-rises-3f1feaf3/) 2. [Dealroom News, Paycom taps $750M debt for buybacks as growth cools to single digits, 5 November 2026](https://dealroom.co/news/169777-paycom-taps-750m-debt-for-buybacks-as-growth-cools-to-single-digits/) 3. [StockStory via MSN, Paycom (NYSE:PAYC) exceeds Q3 2026 expectations, 4 November 2026](https://www.msn.com/en-us/news/other/paycom-nysepayc-exceeds-q3-2026-expectations/ar-AA2gLP3V) 4. [Simply Wall St via Yahoo Finance, Paycom Software (PAYC) Declares Its First Cash Dividend, 5 November 2026](https://finance.yahoo.com/markets/stocks/articles/paycom-software-payc-declares-first-072151843.html) 5. [Paycom, quarterly figures from its SEC filings, retrieved 5 November 2026 (company_series)](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001590955) 6. [StockStory via MSN, HubSpot (NYSE:HUBS) posts better-than-expected sales in Q3 2026 but quarterly revenue guidance misses expectations, 4 November 2026](https://www.msn.com/en-us/news/other/hubspot-nysehubs-posts-better-than-expected-sales-in-q3-2026-but-quarterly-revenue-guidance-misses-expectations/ar-AA2gLxJg) --- Paycom beat every line, then spent $1.39 billion on buybacks while carrying $750 million of debt — The Inference. Canonical: https://theinference.org/article/paycom-beat-every-line-then-spent-1-39-billion-on-buybacks-while-carrying-750-million-of-debt