Paylocity (PCTY) AI Stock Analysis

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Paylocity

(NASDAQ:PCTY)

Rating:71Outperform

Price Target:

$206.00

▲(14.42%Upside)

Paylocity's strong financial performance and positive earnings call results are the main strengths, indicating a robust outlook. However, technical analysis shows bearish signals, and a high valuation may limit upside potential.

Positive Factors

Financial Performance

Paylocity reported strong results and raised full year guidance, indicating a strong performance despite a challenging macroeconomic environment.

New Product Launches

Paylocity launched new products, including features like rewards and recognition, employee voice, and advanced scheduling and learning tools.

Strategic Acquisitions

The integration of finance and spend management provider Airbase is complete, offering Paylocity new growth opportunities by targeting the CFO office.

Negative Factors

Macroeconomic Challenges

There is a risk of seat contraction and lengthening sales cycles due to the challenging macroeconomic environment, which poses near-term risks.

Market Competition

Paylocity is navigating a competitive landscape, indicating a strategic approach to market challenges.

Revenue Forecast

The modest reduction in FY26 subscription revenue has a minimal impact on our profitability estimates.

Paylocity (PCTY) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$10.07B

Dividend YieldN/A

Average Volume (3M)527.65K

Price to Earnings (P/E)44.9

Beta (1Y)0.85

Revenue Growth14.63%

EPS Growth17.15%

CountryUS

Employees6,400

SectorTechnology

Sector Strength84

IndustrySoftware - Application

Share Statistics

EPS (TTM)2.43

Shares Outstanding55,230,110

10 Day Avg. Volume615,002

30 Day Avg. Volume527,648

Financial Highlights & Ratios

PEG Ratio1.37

Price to Book (P/B)12.20

Price to Sales (P/S)0.00

P/FCF Ratio47.63

Enterprise Value/Market Cap1.00

Enterprise Value/Revenue1.70

Enterprise Value/Gross Profit9.44

Enterprise Value/Ebitda7.29

Forecast

1Y Price Target

$227.92

Price Target Upside26.59% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering17

Paylocity Business Overview & Revenue Model

Company DescriptionPaylocity 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 MoneyPaylocity generates revenue primarily through the sale of its cloud-based software solutions on a subscription basis. Clients pay recurring fees for access to its HCM platform, which includes modules for payroll processing, talent management, and other HR functionalities. Additionally, Paylocity earns revenue from professional services associated with the implementation and integration of its solutions. The company benefits from long-term client relationships and a high customer retention rate, contributing to predictable recurring revenue. Strategic partnerships with other technology providers and continuous investment in product innovation further enhance its revenue streams by expanding its market reach and improving service offerings.

Paylocity Earnings Call Summary

Earnings Call Date:May 01, 2025

(Q3-2025)

% Change Since: -7.27%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Positive

The earnings call highlights strong financial performance, increased profitability, and successful product integration and innovation. However, there are concerns about macroeconomic uncertainty affecting client decision-making and potential future sales. Overall, the positives significantly outweigh the concerns.

Q3-2025 Updates

Positive Updates

Strong Revenue Growth

Recurring and other revenue grew 15% year-over-year to $421.1 million, exceeding the high end of guidance by $6.1 million. Total revenue increased by 13% compared to Q3 of the previous fiscal year.

Increased Profitability and Guidance

Adjusted EBITDA for the third quarter was $197.1 million, or 43.4% of revenue, significantly exceeding guidance. The fiscal year 2025 revenue guidance was increased by $19.5 million at the midpoint.

Product and Innovation Recognition

Paylocity was named to TrustRadius' list of best loved software for 2025 and an overall leader in 10 HCM product categories in G2's Spring 2025 Grid Reports. Airbase by Paylocity was named a Visionary in the 2025 Gartner Magic Quadrant for Accounts Payable Applications.

Sales and Operational Execution

Solid sales and operational execution during the busiest time of the year helped drive strong recurring revenue growth and increased revenue and profitability guidance for fiscal 2025.

Strong Channel Performance

Channel referrals, primarily from benefit brokers and financial advisers, represented more than 25% of new business for the third quarter.

Integration of Airbase

The Airbase team is now fully integrated within Paylocity, with progress made towards integrating platforms from both a product and go-to-market perspective.

Negative Updates

Macroeconomic Uncertainty

Some clients are showing cautious behavior due to macroeconomic uncertainty, which has caused some delays in decision-making processes.

Potential Impact on Future Sales

While current performance remains strong, there are early indications of potential softening in the market that could affect future sales momentum.

Company Guidance

During Paylocity's third-quarter fiscal 2025 earnings call, management provided guidance indicating strong financial performance. The company reported recurring and other revenue growth of 15% year-over-year, totaling $421.1 million, which exceeded the high end of their guidance by $6.1 million. Total revenue increased by 13% over the same period last year. The company's adjusted EBITDA for the quarter was $197.1 million, representing 43.4% of the revenue, and significantly exceeded the guidance. Paylocity raised its full-year fiscal 2025 guidance, with recurring and other revenue expected to be in the range of $1.460 billion to $1.465 billion, reflecting approximately 14% growth over the previous fiscal year. Total revenue is anticipated to be between $1.580 billion and $1.585 billion, an increase of approximately 13%. Additionally, the company highlighted strong sales execution and channel performance, particularly from broker referrals, which accounted for more than 25% of new business during the quarter.

Paylocity Financial Statement Overview

Summary

Paylocity shows strong financial health with significant revenue and profit growth, efficient cost management, and solid cash flow generation. The stable balance sheet with prudent leverage supports continued growth and profitability.

Income Statement

Very Positive

Paylocity demonstrates robust revenue growth, increasing from $561.3M in 2020 to TTM of $1.55B, reflecting strong market demand and operational efficiency. The gross profit margin remains high at approximately 68.7% (TTM), indicating effective cost management. Net profit margin improved to 14.6% (TTM), showcasing enhanced profitability. EBIT and EBITDA margins are solid at 19.5% and 19.4% respectively, underscoring strong operational performance. Overall, the income statement reflects a healthy growth trajectory and profitability.

Balance Sheet

Positive

The balance sheet of Paylocity is stable with a debt-to-equity ratio of 0.24 in TTM, indicating conservative leverage usage. The equity ratio stands at 23.4%, supporting financial stability. Return on equity is impressive at 18.8% (TTM), highlighting efficient use of equity to generate profits. Strong cash reserves of $477.8M enhance financial flexibility. However, the equity ratio could be improved to increase resilience against liabilities.

Cash Flow

Very Positive

Cash flow generation is strong with a free cash flow of $381.3M in TTM, reflecting a growth rate of 24.7% from the previous annual period. The operating cash flow to net income ratio is robust at 1.81, indicating excellent cash conversion efficiency. The free cash flow to net income ratio of 1.68 further underscores the company's ability to generate cash relative to earnings. Consistent free cash flow growth supports strategic investments and shareholder returns.

Breakdown	TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	1.55B	1.40B	1.17B	852.65M	635.63M	561.33M
Gross Profit	1.07B	960.79M	807.56M	565.65M	416.33M	379.32M
EBITDA	348.62M	336.52M	215.89M	134.81M	101.02M	104.08M
Net Income	227.34M	206.77M	140.82M	90.78M	70.82M	64.45M
Balance Sheet
Total Assets	5.17B	4.25B	3.70B	4.81B	2.41B	1.99B
Cash, Cash Equivalents and Short-Term Investments	477.79M	401.81M	288.77M	139.76M	206.74M	285.41M
Total Debt	292.78M	54.45M	62.47M	77.52M	67.20M	173.30M
Total Liabilities	3.96B	3.21B	2.85B	4.20B	1.94B	1.59B
Stockholders Equity	1.21B	1.03B	842.86M	613.46M	476.93M	392.91M
Cash Flow
Free Cash Flow	381.34M	305.92M	215.81M	102.47M	86.80M	70.36M
Operating Cash Flow	411.52M	384.67M	282.72M	155.05M	124.85M	112.66M
Investing Cash Flow	-354.02M	-101.89M	-220.16M	-479.77M	48.42M	-48.76M
Financing Cash Flow	-242.31M	141.58M	-1.43B	2.17B	280.48M	2.09M

Paylocity Technical Analysis

Technical Analysis Sentiment

Negative

Last Price180.04

Price Trends

50DMA

188.70

Negative

100DMA

191.65

Negative

200DMA

190.91

Negative

Market Momentum

MACD

-2.92

Negative

RSI

44.25

Neutral

STOCH

81.46

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PCTY, the sentiment is Negative. The current price of 180.04 is below the 20-day moving average (MA) of 182.30, below the 50-day MA of 188.70, and below the 200-day MA of 190.91, indicating a bearish trend. The MACD of -2.92 indicates Negative momentum. The RSI at 44.25 is Neutral, neither overbought nor oversold. The STOCH value of 81.46 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (69)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MANH	78 Outperform	$12.02B	56.64	89.60%	―	9.18%	14.35%
PAYC	77 Outperform	$13.52B	33.38	24.99%	0.64%	9.86%	-14.34%
DAY	75 Outperform	$9.03B	347.09	1.03%	―	14.97%	-51.02%
BSY	74 Outperform	$16.29B	68.26	25.20%	0.52%	10.71%	-27.64%
PYCR	74 Outperform	$4.09B	―	-1.66%	―	15.72%	74.59%
PCTY	71 Outperform	$10.07B	44.89	19.70%	―	14.63%	17.15%
Sector *	69 Neutral	¥229.55B	14.48	7.64%	2.71%	9.13%	8.50%

* Technology Sector Average

Performance Comparison

PCTY

Paylocity

180.04

45.20

33.52%

MANH

Manhattan Associates

198.71

-49.12

-19.82%

PAYC

Paycom

228.13

87.18

61.85%

DAY

Dayforce Inc

55.50

4.66

9.17%

BSY

Bentley Systems

54.08

4.88

9.92%

PYCR

Paycor HCM, Inc.

22.49

9.64

75.02%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jun 10, 2025