Paylocity (PCTY) AI Stock Analysis

• Market Cap: $10.68B
• Dividend Yield: N/A
• Average Volume (3M): 387.41K
• Price to Earnings (P/E): 49.1
• Beta (1Y): 0.96
• Revenue Growth: 15.96%
• EPS Growth: 31.76%
• Country: US
• Employees: 6,400
• Sector: Technology
• Sector Strength: 63
• Industry: Software - Application
• EPS (TTM): 3.90
• Shares Outstanding: 55,887,207
• 10 Day Avg. Volume: 370,360
• 30 Day Avg. Volume: 387,410
• PEG Ratio: 1.54
• Price to Book (P/B): N/A
• Price to Sales (P/S): 7.16
• Price to Cash Flow (P/CF): 49.50
• P/FCF Ratio: 72.80
• Enterprise Value/Market Cap: 1.05
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 11.68
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $238.50
• Price Target Upside: 24.80% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 15

Paylocity's overall stock score reflects its robust financial performance, highlighted by strong revenue growth and effective cash management. The positive sentiment from the earnings call further supports this score. However, high valuation and technical indicators suggesting overbought conditions present potential risks. Concerns regarding debt levels and conservative fiscal guidance also temper the score.

Positive Factors

Acquisitions and Integrations

The acquisition of Airbase allows Paylocity to address its existing customer base with both HCM and spend-management solutions in a single platform.

Financial Performance

Paylocity reported a strong beat-and-raise quarter that outperformed consensus on most key metrics.

Market Position

Analysts believe a premium is merited by Paylocity’s strong market position and consistent execution.

Negative Factors

EBITDA Margins

Total and ex-float EBITDA margin both dipped year-over-year for the first time in several years, due to the known headwind from Airbase.

Integration Challenges

Adj. EBITDA margins ticked down 100bps due to the Airbase acquisition and integration efforts.

Paylocity Business Overview & Revenue Model

Company Description

Paylocity Holding Corporation provides cloud-based human capital management and payroll software solutions for workforce in the United States. The company offers Payroll and Tax Services solution to simplifies payroll, automates processes, and manages compliance requirements within one system; and expense management, on demand payment, and garnishment solutions. It also provides human capital management and employee self-service solutions, document library, compliance dashboard, and HR edge; time and attendance solution; schedule tracking services; and time collection devices, including kiosks, time clocks, and mobile and web applications. In addition, the company offers talent management solutions comprising recruiting and onboarding, as well as learning, performance, and compensation management; employee benefits management and third-party administrative solutions; employee experiences solutions, including community, premium video, survey, and peer recognition; and insights and recommendations solutions, such as modern workforce index, data insights, and reporting. Further, it provides implementation and training, client, and tax and regulatory services. The company serves for-profit and non-profit organizations across industries, including business services, financial services, healthcare, manufacturing, restaurants, retail, technology, and others. It sells its products through sales representatives. The company was founded in 1997 and is headquartered in Schaumburg, Illinois.

How the Company Makes Money

Paylocity generates revenue primarily through a subscription-based model, where clients pay recurring fees to access its cloud-based software platform. The company's key revenue streams include payroll processing fees, which are typically charged on a per-employee-per-month basis, and additional fees for various HCM services such as benefits administration, talent management, and timekeeping solutions. Paylocity also earns money from implementation fees, which are charged during the onboarding process when new clients integrate their systems with Paylocity's platform. Strategic partnerships with other technology providers and service resellers further contribute to its revenue by expanding its market reach and enhancing the value proposition of its offerings.

Paylocity Financial Statement Overview

Summary

Paylocity shows strong financial health with impressive revenue growth, robust profit margins, and efficient cash management. The company's low debt levels and strong ROE further enhance its financial stability, though maintaining growth momentum and slightly below-average balance sheet ratios are potential risks.

Income Statement

Paylocity has demonstrated strong revenue growth, with a TTM revenue of $1.5 billion, up from $1.4 billion annually. The gross profit margin is robust at 68.3%, indicating effective cost management. Net profit margin is healthy at 14.8%, showing strong profitability. EBIT and EBITDA margins stand at 18.8% and 21.5% respectively, reflecting operational efficiency.

Balance Sheet

The company maintains a solid balance sheet with a low debt-to-equity ratio of 0.32, indicating conservative leverage. Return on Equity (ROE) is strong at 18.9%, showcasing effective use of equity capital. The equity ratio is 22.1%, suggesting a balanced capital structure but slightly lower in comparison to peers.

Cash Flow

Paylocity exhibits robust cash flow with a high operating cash flow to net income ratio of 1.78, indicating strong cash generation from operations. The free cash flow growth rate is healthy, and the free cash flow to net income ratio is 1.56, highlighting efficient cash utilization.

Breakdown
Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
1.40B	1.17B	852.65M	635.63M	561.33M
	Gross Profit
960.79M	807.56M	565.65M	416.33M	379.32M
	EBIT
260.09M	155.03M	84.59M	58.04M	66.17M
	EBITDA
336.52M	215.89M	134.81M	101.02M	104.08M
	Net Income Common Stockholders
206.77M	140.82M	90.78M	70.82M	64.45M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
401.81M	288.77M	139.76M	206.74M	285.41M
	Total Assets
4.25B	3.70B	4.81B	2.41B	1.99B
	Total Debt
54.45M	62.47M	77.52M	67.20M	173.30M
	Net Debt
-347.36M	-226.30M	-62.24M	-135.09M	-77.55M
	Total Liabilities
3.21B	2.85B	4.20B	1.94B	1.59B
	Stockholders Equity
1.03B	842.86M	613.46M	476.93M	392.91M
Cash Flow		Free Cash Flow
305.92M	215.81M	102.47M	86.80M	70.36M
	Operating Cash Flow
384.67M	282.72M	155.05M	124.85M	112.66M
	Investing Cash Flow
-101.89M	-220.16M	-479.77M	48.42M	-48.76M
	Financing Cash Flow
141.58M	-1.43B	2.17B	280.48M	2.09M

Paylocity Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 191.11
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PCTY, the sentiment is Positive. The current price of 191.11 is above the 20-day moving average (MA) of 184.30, below the 50-day MA of 192.72, and above the 200-day MA of 182.42, indicating a neutral trend. The MACD of -1.32 indicates Negative momentum. The RSI at 54.93 is Neutral, neither overbought nor oversold. The STOCH value of 77.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PCTY.

Paylocity Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PCTY	79 Outperform	$10.68B	49.07	20.49%	―	15.96%	31.76%
BSY	79 Outperform	$13.15B	60.02	24.39%	0.57%	10.15%	-28.62%
PAYC	78 Outperform	$13.17B	25.52	34.88%	0.66%	11.19%	51.03%
PYCR	74 Outperform	$4.09B	―	-1.66%	―	15.72%	74.59%
DAY	73 Outperform	$9.15B	514.78	0.73%	―	16.27%	-67.39%
MANH	71 Outperform	$10.60B	49.83	89.60%	―	9.18%	14.35%
Sector *	59 Neutral	$10.73B	10.11	-6.65%	3.02%	7.41%	-11.17%