Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Paycom Software Inc., income tax expense (benefit), continuing operations

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Federal	81,348)	17,557)	14,680)	17,812)	12,414)
State	30,051)	9,539)	6,422)	6,688)	4,155)
Provision for current income taxes	111,399)	27,096)	21,102)	24,500)	16,569)
Federal	(2,823)	26,579)	15,204)	16,209)	14,365)
State	(387)	6,327)	6,177)	4,802)	6,712)
Provision for deferred income taxes	(3,210)	32,906)	21,381)	21,011)	21,077)
Provision for income taxes	108,189)	60,002)	42,483)	45,511)	37,646)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Provision for current income taxes	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Paycom Software Inc. provision for current income taxes increased from 2020 to 2021 and from 2021 to 2022.
Provision for deferred income taxes	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Paycom Software Inc. provision for deferred income taxes increased from 2020 to 2021 but then decreased significantly from 2021 to 2022.
Provision for income taxes	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Paycom Software Inc. provision for income taxes increased from 2020 to 2021 and from 2021 to 2022.

Paycom Software Inc., effective income tax rate (EITR) reconciliation

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Federal statutory tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
State income taxes, net of Federal income tax benefit	6.00%	8.00%	8.00%	6.00%	6.00%
Nondeductible expenses	4.00%	6.00%	6.00%	3.00%	1.00%
Research credit, Federal benefit	-2.00%	-3.00%	-3.00%	-3.00%	-2.00%
Stock-based compensation	-1.00%	-7.00%	-9.00%	-7.00%	-4.00%
Remeasurement of state deferred tax liabilities	0.00%	-2.00%	0.00%	0.00%	0.00%
Effective income tax rate	28.00%	23.00%	23.00%	20.00%	22.00%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Effective income tax rate	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

Paycom Software Inc., components of deferred tax assets and liabilities

US$ in thousands

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Mark-to-market investments, OCI	1,260)	—)	—)	—)	—)
Stock-based compensation	4,425)	1,541)	1,219)	994)	1,529)
Investment in Paycom Payroll Holdings, LLC	(146,907)	(147,659)	(114,514)	(92,743)	(73,020)
Net operating losses	189)	614)	697)	532)	935)
Federal tax credits	—)	—)	—)	—)	350)
Noncurrent deferred income tax assets (liabilities), net	(141,033)	(145,504)	(112,598)	(91,217)	(70,206)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Noncurrent deferred income tax assets (liabilities), net	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Paycom Software Inc. noncurrent deferred income tax assets (liabilities), net decreased from 2020 to 2021 but then slightly increased from 2021 to 2022.

Paycom Software Inc., deferred tax assets and liabilities, classification

US$ in thousands

		Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
	Deferred income tax liabilities, net	141,033)	145,504)	112,598)	91,217)	70,206)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Deferred income tax liabilities, net	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Paycom Software Inc. deferred income tax liabilities, net increased from 2020 to 2021 but then slightly decreased from 2021 to 2022.

Paycom Software Inc., adjustments to financial statements

US$ in thousands

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Adjustment to Total Liabilities
Total liabilities (as reported)	2,719,906)	2,321,431)	1,952,269)	1,960,289)	1,187,173)
Less: Noncurrent deferred tax liabilities, net	141,033)	145,504)	112,598)	91,217)	70,206)
Total liabilities (adjusted)	2,578,873)	2,175,927)	1,839,671)	1,869,072)	1,116,967)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	1,182,607)	893,714)	655,643)	526,628)	334,753)
Less: Net deferred tax assets (liabilities)	(141,033)	(145,504)	(112,598)	(91,217)	(70,206)
Stockholders’ equity (adjusted)	1,323,640)	1,039,218)	768,241)	617,845)	404,959)
Adjustment to Net Income
Net income (as reported)	281,389)	195,960)	143,453)	180,576)	137,065)
Add: Deferred income tax expense (benefit)	(3,210)	32,906)	21,381)	21,011)	21,077)
Net income (adjusted)	278,179)	228,866)	164,834)	201,587)	158,142)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Paycom Software Inc., Financial Data: Reported vs. Adjusted

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Paycom Software Inc., adjusted financial ratios

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net Profit Margin
Reported net profit margin	20.46%	18.57%	17.05%	24.48%	24.20%
Adjusted net profit margin	20.23%	21.68%	19.59%	27.33%	27.92%
Financial Leverage
Reported financial leverage	3.30	3.60	3.98	4.72	4.55
Adjusted financial leverage	2.95	3.09	3.39	4.03	3.76
Return on Equity (ROE)
Reported ROE	23.79%	21.93%	21.88%	34.29%	40.95%
Adjusted ROE	21.02%	22.02%	21.46%	32.63%	39.05%
Return on Assets (ROA)
Reported ROA	7.21%	6.09%	5.50%	7.26%	9.01%
Adjusted ROA	7.13%	7.12%	6.32%	8.11%	10.39%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Paycom Software Inc. adjusted net profit margin ratio improved from 2020 to 2021 but then slightly deteriorated from 2021 to 2022 not reaching 2020 level.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Paycom Software Inc. adjusted financial leverage ratio decreased from 2020 to 2021 and from 2021 to 2022.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Paycom Software Inc. adjusted ROE improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Paycom Software Inc. adjusted ROA improved from 2020 to 2021 and from 2021 to 2022.

Paycom Software Inc., Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income	281,389)	195,960)	143,453)	180,576)	137,065)
Revenues	1,375,218)	1,055,524)	841,434)	737,671)	566,336)
Profitability Ratio
Net profit margin¹	20.46%	18.57%	17.05%	24.48%	24.20%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	278,179)	228,866)	164,834)	201,587)	158,142)
Revenues	1,375,218)	1,055,524)	841,434)	737,671)	566,336)
Profitability Ratio
Adjusted net profit margin²	20.23%	21.68%	19.59%	27.33%	27.92%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Net profit margin = 100 × Net income ÷ Revenues
= 100 × 281,389 ÷ 1,375,218 = 20.46%

² Adjusted net profit margin = 100 × Adjusted net income ÷ Revenues
= 100 × 278,179 ÷ 1,375,218 = 20.23%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Paycom Software Inc. adjusted net profit margin ratio improved from 2020 to 2021 but then slightly deteriorated from 2021 to 2022 not reaching 2020 level.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Total assets	3,902,513)	3,215,145)	2,607,912)	2,486,917)	1,521,926)
Stockholders’ equity	1,182,607)	893,714)	655,643)	526,628)	334,753)
Solvency Ratio
Financial leverage¹	3.30	3.60	3.98	4.72	4.55
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Total assets	3,902,513)	3,215,145)	2,607,912)	2,486,917)	1,521,926)
Adjusted stockholders’ equity	1,323,640)	1,039,218)	768,241)	617,845)	404,959)
Solvency Ratio
Adjusted financial leverage²	2.95	3.09	3.39	4.03	3.76

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 3,902,513 ÷ 1,182,607 = 3.30

² Adjusted financial leverage = Total assets ÷ Adjusted stockholders’ equity
= 3,902,513 ÷ 1,323,640 = 2.95

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Paycom Software Inc. adjusted financial leverage ratio decreased from 2020 to 2021 and from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income	281,389)	195,960)	143,453)	180,576)	137,065)
Stockholders’ equity	1,182,607)	893,714)	655,643)	526,628)	334,753)
Profitability Ratio
ROE¹	23.79%	21.93%	21.88%	34.29%	40.95%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	278,179)	228,866)	164,834)	201,587)	158,142)
Adjusted stockholders’ equity	1,323,640)	1,039,218)	768,241)	617,845)	404,959)
Profitability Ratio
Adjusted ROE²	21.02%	22.02%	21.46%	32.63%	39.05%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 281,389 ÷ 1,182,607 = 23.79%

² Adjusted ROE = 100 × Adjusted net income ÷ Adjusted stockholders’ equity
= 100 × 278,179 ÷ 1,323,640 = 21.02%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Paycom Software Inc. adjusted ROE improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income	281,389)	195,960)	143,453)	180,576)	137,065)
Total assets	3,902,513)	3,215,145)	2,607,912)	2,486,917)	1,521,926)
Profitability Ratio
ROA¹	7.21%	6.09%	5.50%	7.26%	9.01%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	278,179)	228,866)	164,834)	201,587)	158,142)
Total assets	3,902,513)	3,215,145)	2,607,912)	2,486,917)	1,521,926)
Profitability Ratio
Adjusted ROA²	7.13%	7.12%	6.32%	8.11%	10.39%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 281,389 ÷ 3,902,513 = 7.21%

² Adjusted ROA = 100 × Adjusted net income ÷ Total assets
= 100 × 278,179 ÷ 3,902,513 = 7.13%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Paycom Software Inc. adjusted ROA improved from 2020 to 2021 and from 2021 to 2022.

Paycom Software Inc. (NYSE:PAYC)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

Paycom Software Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Paycom Software Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)