PAYC · 10-Q · 2026Q2 · Full report
Operating Margin Drivers
Paycom Software, Inc. · 2026-08-06 · Importance 64 · Surprise 56 · No source text
Operating income increased 50.0% year over year to $168.5 million in the second quarter of 2026 and 27.3% to $378.7 million for the first six months. Operating margin expanded from 23.2% to 31.7% in the quarter and from 29.3% to 34.3% year to date. The improvement reflected 9.8% quarterly revenue growth alongside a 2.3% decline in total operating expenses, including lower employee-related costs from reduced headcount and a 30.6% quarterly reduction in research and development expense. Depreciation and amortization increased 28.1% in the quarter and 30.6% year to date because of additional technology development and related fixed-asset purchases.
Key facts
- Three months operating income: $168.5 million (31.7% of total revenues) for the three months ended June 30, 2026, a 50.0% increase versus prior year. source
- Six months operating income: $378.7 million (34.3% of total revenues) for the six months ended June 30, 2026, a 27.3% increase versus prior year. source
- Three months income before income taxes: $156.9 million (29.5% of total revenues) for the three months ended June 30, 2026, a 33.9% increase versus prior year. source
- Six months income before income taxes: $372.1 million (33.7% of total revenues) for the six months ended June 30, 2026, a 21.0% increase versus prior year. source
- Three months net income: $107.4 million (20.2% of total revenues) for the three months ended June 30, 2026, a 20.0% increase versus prior year. source
- Six months net income: $263.1 million (23.9% of total revenues) for the six months ended June 30, 2026, a 15.0% increase versus prior year. source
- Adjusted EBITDA for the three months ended June 30, 2026: $235.0 million. source
- Adjusted EBITDA for the six months ended June 30, 2026: $510.4 million. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | positive | realized | +15.3% | Six months operating income: $378.7 million (34.3% of total revenues) for the six months ended June 30, 2026, a 27.3% increase versus… |
| operating_income | positive | realized | +12.2% | Six months income before income taxes: $372.1 million (33.7% of total revenues) for the six months ended June 30, 2026, a 21.0% increase… |
| operating_income | positive | realized | +10.6% | Three months operating income: $168.5 million (31.7% of total revenues) for the three months ended June 30, 2026, a 50.0% increase versus… |
| operating_income | positive | realized | +7.5% | Three months income before income taxes: $156.9 million (29.5% of total revenues) for the three months ended June 30, 2026, a 33.9%… |
| net_income | positive | realized | +6.5% | Six months net income: $263.1 million (23.9% of total revenues) for the six months ended June 30, 2026, a 15.0% increase versus prior year. |
| net_income | positive | realized | +3.4% | Three months net income: $107.4 million (20.2% of total revenues) for the three months ended June 30, 2026, a 20.0% increase versus prior… |