Oklahoma City-based Paycom Software Inc.’s initial public offering failed to make it out of the starting gate on Friday during a rocky trading day for U.S. stocks.
Paycom CEO Chad Richison had been scheduled to ring the closing bell at the New York Stock Exchange on Friday in celebration of the payroll services company’s first day of trading, but was replaced at the last minute by executives from the Houston company VAALCO Energy Inc.
Paycom’s stock had been set to begin trading between $18 and $20 a share on Friday. The company said in regulatory filings that it planned to raise up to $126 million by offering 6.6 million shares.
Paycom’s stock had been expected to price Thursday night in anticipation of trading beginning Friday morning. The company’s stock is now expected to begin trading sometime early next week.
The company said it was unable to discuss the stock offering on Friday because it was still in a pre-IPO quiet period.
In a regulatory filing Friday, Paycom reported that it expected a net profit of between $300,000 and $1.5 million for the first quarter of the year, down from $5.5 million for the same period a year ago — a 95 percent to 75 percent decrease.
The company said in the filing that the decrease in profits was primarily due to “growth investments,” including sales commissions, new office openings, hiring new staff and reorganization expenses in connection with its planned public offering.
However, Paycom also said in the filing that its annual recurring revenues are growing rapidly by expanding its services to existing customers and the addition of new clients. The company said it anticipates between $12 million and $13 million in new annual recurring revenue in the first quarter of the year, compared to new annual recurring revenue of $9.6 million in the first quarter of 2013 — a 25 percent to 35 percent increase.
Stocks closed sharply lower across the board on Friday, after a continuing sell-off in the tech sector.
Edmond Money Manager Greg Womack said chilly market conditions could have factored into Paycom’s delayed IPO.
“You do want to enter the stage on your best footing with an IPO,” said Womack, of Womack Investment Advisers Inc.
Volatility in the markets is one reason a company might decide to hold off for a few days on an IPO, said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa.
Several companies with IPOs this week debuted to disapointing results, including the auto loan company Ally Financial, which closed down 4 percent on its first day of trading Thursday. The hotel chain La Quinta’s debut on the New York Stock Exchange on Wednesday was also met with a lukewarm reception from investors, closing just 1 percent higher than the reduced IPO price of $18 per share.
“It was a tough week for the majority of IPOs that went public this week, so it would not be a total shock for a company to see what happened this week and say ‘maybe we should wait a few days and let the dust settle,’” Dollarhide said.