Company: PAYC
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0000950170-25-024136
Chunk: 85

Company: Paycom Software, Inc.
Filing Date: 2025-02-20
Form: 10-K
Item: Item 1B
Chunk 85
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 support our growth. While we expect this trend to continue on an absolute dollar basis and as a percentage of total revenues, we also anticipate the rate of increase to decline over time as we leverage our growth and realize additional economies of scale. As is customary for our business, we also expect fluctuations in research and development expense as a percentage of revenue on a quarter-to-quarter basis due to seasonal revenue trends, the introduction of new products, the amount and timing of research and development costs that may be capitalized and the timing of onboarding new hires and restricted stock vesting events.

Expenditures for software developed or obtained for internal use are capitalized and amortized over a three-year period on a straight-line basis. The nature of the development projects underway during a particular period directly impacts the timing and extent of these capitalized expenditures and can affect the amount of research and development expenses in such period. The table below sets forth the amounts of capitalized and expensed research and development costs for the years ended December 31, 2024 and 2023:

    Year Ended December 31,

    2024

    2023

    % Change

    Capitalized portion of research and development
     
    $
    125.7

    $
    96.7

    30%

    Expensed portion of research and development

    242.6

    199.0

    22%

    Total research and development costs
     
    $
    368.3

    $
    295.7

    25%

General and administrative

During the year ended December 31, 2024, general and administrative expenses decreased $129.5 million from the prior year primarily due to a $117.5 million reversal of previously recognized stock-based compensation expense related to the forfeiture of a restricted stock award upon Chad Richison’s transition to Co-Chief Executive Officer, and a $11.4 million decrease in other employee-related expenses.

Non-Cash Stock-Based Compensation Expense

The following table presents the non-cash stock-based compensation expense that is included within the specified line items in our consolidated statements of comprehensive income:

    Year Ended December 31,

    2024

    2023

    % Change

    Operating expenses
     
    $
    13.5

    $
    10.6

    27%

    Sales and marketing

    19.0

    23.9

    -21%

    Research and development

    26.3