Paycom Software (PAYC) Stock Forecast & Price Target

Paycom Software is attractive because its recurring subscription model, 7.4 million employee records across more than 20,000 clients, and midmarket North American base provide durable revenue visibility and cross-sell potential. Its 3Q revenue of $543.8M beat estimates, recurring and other revenue grew 11.3% year over year, and EBITDA margin expanded to 49.3% as automation and AI-driven efficiency improved operating leverage. Management’s higher guidance for 2026, plus expectations for stronger free cash flow in 2027 and transformational products in the pipeline, support the view that growth can accelerate while margins and cash generation continue to expand.

Paycom Software is facing a negative outlook because recurring and other revenue growth slowed to 11.3% in Q3, only 30 bps above Q2, and updated FY26 guidance implies just ~9% growth with Q4 near ~4.4%, signaling further deceleration. Despite strong profitability, including a raised FY26 adjusted EBITDA margin outlook to 48.5% and $164 million of Q3 free cash flow, those strengths are already reflected in a valuation of about 5.3x CY27E EV/Sales and 17x CY27E EV/FCF after shares rose 68% YTD. The company also faces intensifying price competition from rivals and increasing AI-driven pressure on cross-sell and new-customer gains, leaving consensus FY27 expectations at risk.