PAYC · 10-Q · 2026Q2 · Full report
Operating Expense Trends
Paycom Software, Inc. · 2026-08-06 · Importance 58 · Surprise 56 · No source text
Research and development expense fell 30.6% to $51.9 million in the second quarter and 17.8% to $112.6 million for the six months, primarily because of lower employee-related expense and reduced headcount. Total research and development costs, including capitalized amounts, declined 40% to $67.6 million in the quarter and 26% to $153.6 million year to date, while capitalized development costs fell 58% and 42%, respectively. Sales and marketing expense increased 2.4% to $118.8 million in the quarter and 4.2% to $236.4 million year to date, driven by $4.6 million and $11.7 million increases in marketing and advertising. General and administrative expense increased 10.2% to $77.3 million in the quarter and 7.8% to $146.6 million year to date, primarily due to higher professional fees and technology and communications costs.
Key facts
- Three months non-cash stock-based compensation expense included in total: $17.6 million for the three months ended June 30, 2026, a 54% decrease versus prior year. source
- Three months cost of revenues: $89.1 million (16.8% of total revenues) for the three months ended June 30, 2026, a 1.8% increase versus prior year. source
- Six months cost of revenues: $176.4 million (16.0% of total revenues) for the six months ended June 30, 2026, a 2.5% increase versus prior year. source
- Three months total administrative expenses: $273.6 million (51.5% of total revenues) for the three months ended June 30, 2026, a 3.6% decrease versus prior year. source
- Six months total administrative expenses: $547.9 million (49.7% of total revenues) for the six months ended June 30, 2026, a 0.6% increase versus prior year. source
- Three months total operating expenses: $362.7 million (68.3% of total revenues) for the three months ended June 30, 2026, a 2.3% decrease versus prior year. source
- Six months total operating expenses: $724.4 million (65.7% of total revenues) for the six months ended June 30, 2026, a 1.1% increase versus prior year. source
- Three months sales and marketing expenses: $118.8 million (22.4% of total revenues) for the three months ended June 30, 2026, a 2.4% increase versus prior year. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | positive | realized | +5.5% | Six months non-cash stock-based compensation expense included in total: $31.6 million for the six months ended June 30, 2026, a 48%… |
| operating_income | positive | realized | +3.9% | Three months non-cash stock-based compensation expense included in total: $17.6 million for the three months ended June 30, 2026, a 54%… |
| operating_income | positive | realized | +1.9% | Three months total administrative expenses: $273.6 million (51.5% of total revenues) for the three months ended June 30, 2026, a 3.6%… |
| operating_income | negative | realized | -1.8% | Six months sales and marketing expenses: $236.4 million (21.4% of total revenues) for the six months ended June 30, 2026, a 4.2% increase… |
| operating_income | positive | realized | +1.6% | Three months total operating expenses: $362.7 million (68.3% of total revenues) for the three months ended June 30, 2026, a 2.3% decrease… |
| operating_income | negative | realized | -1.5% | Six months total operating expenses: $724.4 million (65.7% of total revenues) for the six months ended June 30, 2026, a 1.1% increase… |
| operating_income | negative | realized | -0.8% | Six months cost of revenues: $176.4 million (16.0% of total revenues) for the six months ended June 30, 2026, a 2.5% increase versus prior… |
| operating_income | negative | realized | -0.7% | Six months total administrative expenses: $547.9 million (49.7% of total revenues) for the six months ended June 30, 2026, a 0.6% increase… |
| operating_income | negative | realized | -0.5% | Three months sales and marketing expenses: $118.8 million (22.4% of total revenues) for the three months ended June 30, 2026, a 2.4%… |
| operating_income | negative | realized | -0.3% | Three months cost of revenues: $89.1 million (16.8% of total revenues) for the three months ended June 30, 2026, a 1.8% increase versus… |
| operating_income | positive | probable | — | Company expects research and development employee-related expenses to be lower in 2026 versus 2025 as a result of reduced headcount. |