Paycom Software Inc [NYSE: PAYC] has been on an upward trajectory since April. That’s despite the company being impacted by the COVID-19 pandemic. Recently, the company announced that in Q2, its quarterly revenues dropped by 14% compared to a similar period in the last financial year.
The stock’s strong upside momentum despite this drop can be attributed to the fact that the company has been investing heavily in advertising. While releasing Q2 results, the company stated that it increased its marketing spend by 36% in the quarter, and its research and development budget by 30%.
According to CEO Chad Richison, the company had spent more on marketing in Q2 than it has ever spent in any other quarter. He also added that aggressive investment in advertising had started to bear fruit on a weekly basis. He stated that while it is not always easy to see where advertising dollars go, the company had clearly seen the benefits in Q2.
According to him, they were able to see tangible effects in terms of new business development. He added that the results were due to two key factors. The first one is that the company was able to see an increase in the number of customers checking out its website and requesting product demos. Secondly, the company recorded an increase in demand for virtual meetings, which saw an acceleration of the sales cycle to days, from previous cycles that took weeks.
In terms of Research and Development, the CEO stated that thanks to the R&D efforts, a number of cloud-based tools were developed in Q2. Some of them include the company’s Manager-on-the-go application. This is an app that gives business executives the ability to handle executive business functions straight from their smartphones. He also added that the company would continue investing in R&D to give customers an even better experience.
These developments have given investors the impression that despite the hard times, this company is willing to adapt to the changing environment.
Going forward, this stock stands to get even stronger. That’s because, with a COVID-19 ending now closer than ever, business is likely to return to normal, sooner rather than later. As this happens, the company will benefit both from its old clientele and the new ones. This is likely to draw in even more investor optimism in the near-term.
About Paycom Software Inc
Paycom Software Inc is a cloud-based HR management company. It is based in Oklahoma City, Oklahoma.