Moreover, the company's quarterly earnings update has prompted multiple brokerages to downgrade their rating on the stock.
Adjusted earnings per share came in at $1.77, up from $1.27 year-on-year and exceeding the estimated $1.60.
Revenue for the quarter reached $406.3 million, marking a 22% increase compared to the same period the previous year. However, this figure fell slightly short of the estimated $411.1 million.
“Our third quarter fundamentals were strong with solid revenue and earnings growth,” said Paycom’s founder, chairman and CEO, Chad Richison.
Paycom Software anticipates fourth-quarter revenue in the range of $420 million to $425 million, which is notably below the average analyst estimate of $452.3 million.
Full-year revenue is now seen in the range of $1.679 billion to $1.684 billion.
At least six Wall Street brokerages downgraded shares following the guidance cut.
"We are downgrading PAYC to Neutral due to revenue deceleration; growth of 10%+ vs. 25%+ previously; and potential operational changes that need to be made to protect margins," Piper Sandler analysts wrote in a note.
PAYC shares now trade around $160 following Wednesday’s selloff.