TrinetThe market for Internet-based payroll and HR services is drawing a crowd as three organizations have gone to the public market for funds. Those are the TriNet Group, Paycom Software and Paylocity with TriNet having raised $240 million in an IPO that was priced a week ago. Paylocity went public on March 18 while Paycom filed a registration statement for its proposed IPO on March 10.

Although TriNet has payroll and HR services, the majority of its revenue comes from the sale of insurance services. The San Leandro, Calif.-based company had $13.1 million in net income for the year ended December 31, down 59 percent from $31.8 million in earnings for 2012. Revenue for the most recently ended year was $1.64 billion, an increase of 61.4 percent from just over $1 billion the prior year. For those two years, insurance services represented 85 percent and 83 percent of revenue.

But it has grown professional services revenue quickly. For the same year, revenue for the payroll, HR and other professional services rose 62 percent from just over $269 million to $417.7 million. Part of that steep growth pace is due to acquisitions. That includes the purchase last year of the Ambrose Employer Group, which serves high-end financial services industry. The company emphasizes bundling payroll with HR services and said it is committed to expand by focusing on vertical markets, whether through acquisition or internal development. TriNet also markets ExpenseCloud, which it integrated with its payroll services late in 2013.

Paycom, based in Oklahoma City, Okla., markets a product line with as single data base serving human capital management functions, including talent acquisition, time and labor management, payroll, talent management and HR management applications. It had net income of $7.7 million for the year ended December 31, up 82 percent from $4.2 million the prior year. Revenue last year reached $107.6 million, an increase of 40 percent from $76.8 million in 2012.

The company intends to raise about $78 million via the IPO and intends to use $54.9 million to retire two notes.

Based in Arlington Heights, Ill., Paylocity, which targets organizations with 20 to 1,000 employees, also emphasizes selling services through a range of HCM applications, including payroll and HR management. The company said it intended to repay $1.3 million borrowed via a note and provide funds for working capital and other corporate purposes. It had about $85 million in proceeds from the offering.

The company lost $1.6 million for the half ended June 30, up from a loss of just over $1 million in last year's corresponding period. Revenue for the most recently ended period was $46.3 million, an increase of 40 percent from just over $33 million a year earlier.

Bob Scott
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards.  Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He  has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that.  A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
Last modified on Tuesday, 24 June 2014
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