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Paylocity (PCTY)
NASDAQ:PCTY
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Paylocity
(NASDAQ:PCTY)81Outperform
Positive Factors
Financial Performance
Paylocity delivered a beat & raise quarter, with revenue and EBITDA ahead of consensus expectations, and raised its revenue growth targets.
Market Opportunities
There are early signs of interest from both new and existing customers, reinforcing a positive view on the Airbase cross-sell opportunity.
Negative Factors
Profitability
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.
Paylocity (PCTY) vs. S&P 500 (SPY)
Market Cap
$11.42B
Dividend YieldN/A
Average Volume (3M)516.26K
Price to Earnings (P/E)52.6
Beta (1Y)1.09
Revenue Growth15.96%
EPS Growth31.76%
CountryUS
Employees6,400
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)3.90
Shares Outstanding55,887,207
10 Day Avg. Volume436,701
30 Day Avg. Volume516,256
Financial Highlights & Ratios
PEG Ratio1.66
Price to Book (P/B)N/A
Price to Sales (P/S)7.62
Price to Cash Flow (P/CF)52.70
P/FCF Ratio77.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$248.07Price Target Upside24.63% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering15
Paylocity Business Overview & Revenue Model
Company DescriptionPaylocity Holding Corporation (PCTY) is a leading provider of cloud-based payroll and human capital management (HCM) software solutions. The company operates primarily in the United States and serves small to mid-sized organizations across various industries. Paylocity's comprehensive suite of services includes payroll processing, benefits administration, time and labor tracking, talent management, and employee engagement tools, all designed to enhance efficiency and streamline HR processes for its clients.
How the Company Makes MoneyPaylocity 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 presents a strong financial profile characterized by substantial revenue growth, solid profitability, and efficient cash management. The company maintains a healthy balance sheet with low leverage, enhancing financial stability. Potential risks include maintaining growth momentum and managing balance sheet ratios slightly below industry averages.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.90
Very Positive
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.85
Very Positive
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.88
Very Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.50B | 1.40B | 1.17B | 852.65M | 635.63M | 561.33M | Gross Profit |
| 1.02B | 960.79M | 807.56M | 565.65M | 416.33M | 379.32M | EBIT |
| 281.49M | 260.09M | 155.03M | 84.59M | 58.04M | 66.17M | EBITDA |
| 322.30M | 336.52M | 215.89M | 134.81M | 101.02M | 104.08M | Net Income Common Stockholders |
| 221.17M | 206.77M | 140.82M | 90.78M | 70.82M | 64.45M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 401.81M | 401.81M | 288.77M | 139.76M | 206.74M | 285.41M | Total Assets |
| 4.25B | 4.25B | 3.70B | 4.81B | 2.41B | 1.99B | Total Debt |
| 54.45M | 54.45M | 62.47M | 77.52M | 67.20M | 173.30M | Net Debt |
| -347.36M | -347.36M | -226.30M | -62.24M | -135.09M | -77.55M | Total Liabilities |
| 3.21B | 3.21B | 2.85B | 4.20B | 1.94B | 1.59B | Stockholders Equity |
| 1.03B | 1.03B | 842.86M | 613.46M | 476.93M | 392.91M |
| Cash Flow | Free Cash Flow | ||||
| 344.60M | 305.92M | 215.81M | 102.47M | 86.80M | 70.36M | Operating Cash Flow |
| 393.04M | 384.67M | 282.72M | 155.05M | 124.85M | 112.66M | Investing Cash Flow |
| -340.67M | -101.89M | -220.16M | -479.77M | 48.42M | -48.76M | Financing Cash Flow |
| 347.26M | 141.58M | -1.43B | 2.17B | 280.48M | 2.09M |
Paylocity Technical Analysis
Neutral
199.04
Price Trends
203.02
Negative
197.79
Positive
174.43
Positive
Market Momentum
-0.59
Positive
41.81
Neutral
21.94
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PCTY, the sentiment is Neutral. The current price of 199.04 is below the 20-day moving average (MA) of 208.68, below the 50-day MA of 203.02, and above the 200-day MA of 174.43, indicating a neutral trend. The MACD of -0.59 indicates Positive momentum. The RSI at 41.81 is Neutral, neither overbought nor oversold. The STOCH value of 21.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PCTY.
Paylocity Risk Analysis
Paylocity disclosed 30 risk factors in its most recent earnings report. Paylocity reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Paylocity Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $11.42B | 52.62 | 18.87% | ― | 15.96% | 31.76% | |
79 Outperform | $67.47B | 129.59 | 5.82% | ― | 17.04% | -62.24% | |
78 Outperform | $12.61B | 24.70 | 31.85% | 0.68% | 11.19% | 51.03% | |
77 Outperform | $127.53B | 32.70 | 77.46% | 1.80% | 7.09% | 11.51% | |
77 Outperform | $324.73B | 94.89 | 6.88% | 0.62% | 9.55% | -2.28% | |
73 Outperform | $1.01B | 19.66 | 23.93% | 0.77% | 7.03% | 7.75% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
PCTY
Paylocity
199.04
34.23
20.77%
ADP
Automatic Data Processing
313.44
74.68
31.28%
BBSI
Barrett Business Services
39.00
9.96
34.30%
SAP
SAP AG
279.05
93.27
50.20%
WDAY
Workday
253.63
-13.11
-4.91%
PAYC
Paycom
217.21
44.37
25.67%
Paylocity Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -6.12% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call reflected a positive outlook with strong revenue growth, product innovation, and increased fiscal guidance, despite some concerns related to debt from the Airbase acquisition and conservative future guidance.Highlights
Strong Revenue Growth
The company reported recurring and other revenue growth of 17% and total revenue growth of 16% over the previous year.
Product Innovation and Differentiation
Launch of new products including benefit decision support and integrated headcount planning, along with increased average revenue per client from $550 to $600.
AI Assistant Adoption
The new AI assistant chatbot showed a 30% increase in utilization and a 20% reduction in time required for users to find reports.
Awards and Recognition
Paylocity was awarded the TrustRadius Buyer's Choice Award and named overall leader in ten HCM product categories in G2's Winter 2025 Grid Reports.
Strong Financial Performance
Adjusted EBITDA for the second quarter was $126.2 million, or a 33.5% margin, exceeding the midpoint of guidance by $8.2 million.
Increased Fiscal Year Guidance
The company raised fiscal 2025 revenue guidance by $20.5 million at the midpoint due to strong sales performance.
Lowlights
Debt from Airbase Acquisition
The company ended the quarter with $325 million in debt outstanding related to the Airbase acquisition.
Airbase Contribution is Small
Contribution from Airbase is approximately 1% of revenue, indicating it is still a small part of the overall business.
Conservative Fiscal Guidance
Despite a strong first half, Q3 guidance implies potential slowdown in recurring revenue growth, possibly below 10% in Q4.
Company Guidance
During the Paylocity Second Quarter 2025 Earnings Call, notable metrics highlighted a robust performance with key figures including a 17% growth in recurring and other revenue and a 16% increase in total revenue compared to Q2 of the previous year. The company's strategic investment in R&D contributed to a significant expansion of their product suite, raising their average revenue per client from $550 to $600. The introduction of AI capabilities, like the AI assistant chatbot, resulted in a 30% increase in utilization and a 20% reduction in time required for users to find reports. Financially, Paylocity reported an adjusted gross profit margin of 73.8%, a 110 basis point improvement from the prior year, and an adjusted EBITDA of $126.2 million, representing a 33.5% margin. The company also increased its fiscal 2025 guidance, expecting recurring and other revenue to be between $1.445 billion to $1.455 billion, total revenue between $1.558 billion to $1.568 billion, and adjusted EBITDA between $542 million to $550 million.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.