I was thinking over the guidance that Payc CFO gave for next quarter. He guided for Revenue of between $45 million and $46 million. I think that is a low ball figure and let me explain why.
Payc had revenue of $54.4 million this last quarter. Their revenue model is prescription based. They claim that they have a 90% retention rate. So if next quarter they lose 10% of their prescription this would come up to a loss of $5.44 million dollars which would then make their revenue come to $48.96 million dollars. Then subtract the $1.5 million that they made from their clients for taxes and we come to $47.46 million. Now we have to believe that neither of the new sales teams will make any sales this next quarter. They have 2 new sales teams, one in 2014 and one in 2015. Payc claims that it takes 2 years to get a sales team up and running at maximum capacity. So I am just going to guess and say that these two teams will bring in at least 1 million in revenue. So I think that Payc will come in with Revenue next quarter of $47.46 million to $48.46 million. I think EBITDA will come in at $7.9 million to $8.97 million.
Just some thoughts.
Andy
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Their revenue model is prescription based.
err not sure what business model that is but do you mean subscription based? Or do physicians prescribe people a course of payc?
Ant
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If your looking at “prescription based revenue models,” I think GILD would be a better fit IMHO.
Just saying 
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Ant,
LOL your right subscription. Sorry about that. Thanks for the correction.
Andy
I think GILD would be a better fit IMHO.
Good point Chadosan.
Andy
A friend of mine just got a new sales job in a field only partially related to his old field. He was told that management expects that it will take a year or more before he becomes productive. Meanwhile he is having to learn a lot of new tech , adjust to a totally different management style, and find a lot off new customers in a new city.
Which fits with what PAYC says. Meanwhile they draw a salary but are more students than salesmen. The new ones will not be bringing in much in the way of sales. Hiring them at all is a bet that demand for product will be higher in a couple of years. And that these particular salespersons can learn enough about the product and about selling it to increase sales . IOW, a bet a year or more ahead, not a bet for the next couple of quarters.
Unless the product sells itself.
I had another friend who worked for Xerox in their early copier days, he was selling lots of Xerox machines, and thought he was the word’s best salesman, so he quit Xerox. He then found out he wasn’t a super salesman after all.
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I agree with you Mauser but I think the salesman from the class of 2014 should be getting up to speed and the company is not counting them in their sales target. I could be wrong but I would think they might be able to get a few sales.
Andy
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