Discounted Cash Flow (DCF) Analysis Unlevered

Paycom Software Inc. (PAYC)

Technology

Operating Data

Year A/P	2013 Actual	2014 Actual	2015 Actual	2016 Actual	2017 Actual	2018 Actual	2019 Projected	2020 Projected	2021 Projected	2022 Projected	2023 Projected
Revenue	107.60	150.93	224.66	329.15	433.07	566.36	790.59	1,103.58	1,540.49	2,150.37	3,001.70
Revenue (%)
EBITDA	16.15	20.24	44.37	115.66	148.02	205.14	202.55	282.74	394.67	550.92	769.03
EBITDA (%)
EBIT	10.66	13.07	34.96	102.04	128.62	175.46	165.79	231.42	323.04	450.93	629.46
EBIT (%)
Depreciation	5.49	7.17	9.41	13.63	19.40	29.68	36.76	51.32	71.63	99.99	139.58
Depreciation (%)

Balance Sheet Data

Year A/P	2013 Actual	2014 Actual	2015 Actual	2016 Actual	2017 Actual	2018 Actual	2019 Projected	2020 Projected	2021 Projected	2022 Projected	2023 Projected
Total Cash	13.73	25.51	50.71	60.17	46.08	45.71	117.56	164.10	229.07	319.76	446.35
Total Cash (%)
Account Receivables	1.70	2.79	2.36	1.35	1.56	3.40	7.75	10.82	15.10	21.07	29.42
Account Receivables (%)
Inventories	0.58	0.20	1.10	0.69	1.00	0.79	2.29	3.20	4.47	6.24	8.70
Inventories (%)
Accounts Payable	5.02	3.05	4.90	3.75	6.50	6.29	16.60	23.18	32.35	45.16	63.04
Accounts Payable (%)
Capital Expenditure	-16.91	-14.26	-16.56	-43.51	-59.37	-59.92	-92.34	-128.90	-179.93	-251.16	-350.60
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 268.71
Diluted Shares Outstanding	57.71
Cost of Debt
Tax Rate	21.55
After-tax Cost of Debt	-1.03
Risk-Free Rate
Market Risk Premium
Cost of Equity	16.64
Total Debt	32.61
Total Equity	15,507.61
Total Capital	15,540.22
Debt Weighting	0.21
Equity Weighting	99.79
Wacc

Build Up Free Cash

Year A/P	2013 Actual	2014 Actual	2015 Actual	2016 Actual	2017 Actual	2018 Actual	2019 Projected	2020 Projected	2021 Projected	2022 Projected	2023 Projected
Revenue	107.60	150.93	224.66	329.15	433.07	566.36	790.59	1,103.58	1,540.49	2,150.37	3,001.70
EBITDA	16.15	20.24	44.37	115.66	148.02	205.14	202.55	282.74	394.67	550.92	769.03
EBIT	10.66	13.07	34.96	102.04	128.62	175.46	165.79	231.42	323.04	450.93	629.46
Tax Rate	56.86%	41.35%	37.52%	30.28%	3.32%	21.55%	31.81%	31.81%	31.81%	31.81%	31.81%
EBIAT	4.60	7.67	21.84	71.14	124.35	137.65	113.04	157.79	220.27	307.47	429.20
Depreciation	5.49	7.17	9.41	13.63	19.40	29.68	36.76	51.32	71.63	99.99	139.58
Accounts Receivable	-	-1.09	0.43	1.01	-0.21	-1.84	-4.35	-3.07	-4.28	-5.98	-8.34
Inventories	-	0.38	-0.90	0.41	-0.30	0.20	-1.50	-0.91	-1.27	-1.77	-2.47
Accounts Payable	-	-1.98	1.85	-1.15	2.74	-0.21	10.32	6.57	9.18	12.81	17.88
Capital Expenditure	-	-2.65	2.29	26.96	15.86	0.55	32.42	36.56	51.03	71.23	99.44
UFCF	10.09	9.50	34.93	111.99	161.84	166.03	186.69	248.27	346.56	483.76	675.28
WACC
PV UFCF							160.08	182.55	218.50	261.54	313.05
SUM PV UFCF											690.70

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	16.62
Free cash flow (t + 1)	702.29
Terminal Value	5,564.88
Present Value of Terminal Value	2,579.83

Intrinsic Value

Enterprise Value	3,270.53
Net Debt	-13.09
Equity Value	3,283.62
Shares Outstanding	57.71
Equity Value Per Share	56.90

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