Paycom Software, Inc. Leases Disclosure
The Company’s leases primarily consist of noncancellable operating leases for facilities with contractual terms expiring from to . All of our leases are operating leases. The lease term is defined as the fixed noncancellable term of the lease plus all periods, if any, for which failure to renew the lease imposes a penalty on us in an amount that appears, at the inception of the lease, to be reasonably assured. While some of our leases include an option to extend the lease up to seven years, it is not reasonably certain that any such options will be exercised. Some of our leases contain a termination option that is not reasonably certain to be exercised. If a termination option is exercised, we remeasure the lease asset in the consolidated balance sheets using the updated lease period. None of our leases contain residual value guarantees, substantial restrictions or covenants.
The table below presents the lease assets and liabilities as of December 31, 2025 and December 31, 2024.
Balance Sheet location |
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
|
$ |
89.4 |
|
|
$ |
80.6 |
|
|
Lease liabilities: |
|
|
|
|
|
|
||
Operating lease liabilities |
|
$ |
28.4 |
|
|
$ |
20.4 |
|
Long-term operating lease liabilities |
|
$ |
61.9 |
|
|
$ |
63.0 |
|
Rent expense under operating leases for the years ended December 31, 2025, 2024 and 2023 was $25.2 million, $21.7 million and $18.1 million, respectively. Cash paid for amounts relating to our operating leases was $28.9 million for the year ended December 31, 2025.
Because no implicit discount rates for our leases could be readily determined, we elected to use an estimated incremental borrowing rate to determine the present value of our leases. The weighted average discount rate related to our portfolio of leases at December 31, 2025 was 5.1%. The weighted average remaining lease term for our leases was 3.6 years as of December 31, 2025.
The undiscounted cash flows for the future annual maturities of our operating lease liabilities and the reconciliation of those total undiscounted cash flows to our lease liabilities as of December 31, 2025 were as follows:
2026 |
|
$ |
29.6 |
|
2027 |
|
|
28.3 |
|
2028 |
|
|
20.7 |
|
2029 |
|
|
13.1 |
|
2030 |
|
|
5.7 |
|
Thereafter |
|
|
3.9 |
|
Total undiscounted cash flows |
|
$ |
101.3 |
|
Present value discount |
|
|
(11.0 |
) |
Lease liabilities |
|
$ |
90.3 |
|
There were no new leases that had not yet commenced as of December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 13, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.