Paylocity (PCTY) AI Stock Analysis

• Market Cap: $5.81B
• Dividend Yield: N/A
• Average Volume (3M): 993.47K
• Price to Earnings (P/E): 25.4
• Beta (1Y): 0.82
• Revenue Growth: 13.30%
• EPS Growth: 2.80%
• Country: US
• Employees: 6,400
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.85
• Shares Outstanding: 53,876,694
• 10 Day Avg. Volume: 855,071
• 30 Day Avg. Volume: 993,469
• PEG Ratio: 4.08
• Price to Book (P/B): 8.17
• Price to Sales (P/S): 6.32
• P/FCF Ratio: 29.42
• Enterprise Value/Market Cap: 1.06
• Enterprise Value/Revenue: 3.67
• Enterprise Value/Gross Profit: 5.32
• Enterprise Value/Ebitda: 13.81
• 1Y Price Target: $170.81
• Price Target Upside: 58.45% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 18
• EPS Forecast (FY): 7.76
• Revenue Forecast (FY): $1.74B

• Rating: 70 Outperform
• Price Target: $114.00 ▲(5.75% Upside)
• Action: Reiterated Date: 02/07/26
• Date: Action: Reiterated 02/07/26

The score is supported primarily by strong financial performance (profitability expansion, healthy balance sheet, and robust free cash flow) and a constructive earnings update with raised FY2026 guidance and continued buybacks. Offsetting these positives, the technical picture is weak with the stock in a pronounced downtrend despite oversold readings, and valuation is only moderately supportive given a ~27.7 P/E and no indicated dividend yield.

Positive Factors

Recurring SaaS revenue scale

Paylocity’s subscription-based HCM model and multi-year revenue expansion to ~$1.68B TTM produce durable, predictable cash flows. Raised FY26 recurring revenue guidance (~10%–11%) underscores sticky customer relationships and recurring fee leverage that support sustainable growth and planning over 2–6 months.

High and improving margins

Consistently high gross margins (~65–74%) and meaningful EBIT expansion reflect scalable software economics and operating leverage. Margin improvement is structural—driven by product mix, scale and embedded AI—supporting durable profitability even as the company reinvests in R&D and go-to-market.

Strong cash generation and conservative balance sheet

High FCF conversion and low leverage give Paylocity financial flexibility to fund R&D, acquisitions, and buybacks without stressing liquidity. Reliable cash conversion and a conservative balance sheet are durable strengths that enable disciplined capital allocation and resilience across economic cycles.

Negative Factors

Moderating and volatile revenue growth

A trend toward slower, more variable revenue expansion reduces the pace at which scale benefits and operating leverage can compound. Persistent moderation can restrain long-term margin upside, make forecast visibility harder for investors, and pressure resource allocation decisions over the next several quarters.

Earnings sensitivity to client-funds interest

A sizable float (~$3B+) ties reported results to short-term interest rates and Fed moves, creating structural earnings volatility independent of core software performance. Management forecasts interest as a line-item, but rate swings can materially alter EBITDA and FCF, complicating medium-term planning and comparability.

Concentration in broker/referral new business

Relying on a single distribution channel for a large share of new sales is a durable structural risk: changes in broker economics, regulations, or partner behavior could materially impact new client acquisition and growth cadence, reducing predictability of top-line expansion over multiple quarters.

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 subscription fees for its cloud-based software and services. Clients typically pay an annual subscription fee that varies based on the number of employees and the specific services utilized. The company also earns revenue from implementation services, training, and ongoing customer support. Additional revenue streams come from value-added services such as benefits administration, tax filing, and compliance services. Strategic partnerships with various HR and technology companies enhance Paylocity's offerings and market presence, contributing to its overall earnings by expanding its customer base and enhancing service capabilities.

Paylocity Financial Statement Overview

Summary

Strong multi-year revenue scale-up (to ~$1.68B TTM) with meaningful profitability improvement (EBIT margin ~19% TTM; net margin ~13.7% TTM). Balance sheet is conservatively levered (debt-to-equity ~0.12 TTM) and cash generation is strong (TTM FCF ~$444M; ~92% of net income). Key risk is growth and free-cash-flow variability and recent moderation in revenue growth.

Income Statement

PCTY shows strong top-line expansion, with revenue rising from $636M (2021) to $1.60B (FY2025) and reaching $1.68B in TTM (Trailing-Twelve-Months). Profitability has improved meaningfully over time, with EBIT margin expanding from ~9% (2021) to ~19% (TTM) and net margin moving into the mid-teens (TTM ~13.7%). Strengths are consistent gross margins (~65–69%) and rising operating leverage; the main weakness is growth volatility—very strong earlier growth (2022–2023) has moderated materially in the most recent annual period.

Balance Sheet

The balance sheet looks healthy with low leverage: debt-to-equity is modest across periods (TTM ~0.12; FY2025 ~0.18), supporting financial flexibility. Shareholders’ equity has grown steadily (from ~$477M in 2021 to ~$1.23B in FY2025), and returns on equity are solid (~18–20% in recent periods), indicating efficient capital use. The key watch item is the notable increase in total assets versus earlier years, which can pressure future returns if asset growth outpaces earnings, though current ROE remains strong.

Cash Flow

Cash generation is a clear strength: operating cash flow is $476M and free cash flow is $444M in TTM (Trailing-Twelve-Months), with free cash flow generally tracking net income well (TTM free cash flow is ~92% of net income). Free cash flow growth is strong in TTM, but the trajectory has been uneven (a dip in FY2025 after strong FY2024). Overall, the company converts earnings to cash effectively, with the primary weakness being year-to-year variability in free cash flow growth.

Breakdown	TTM	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 2021
Income Statement
Total Revenue	1.68B	1.60B	1.40B	1.17B	852.65M	635.63M
Gross Profit	1.16B	1.10B	960.79M	807.56M	565.65M	416.33M
EBITDA	446.03M	403.66M	336.52M	215.89M	134.81M	101.02M
Net Income	238.28M	227.13M	206.77M	140.82M	90.78M	70.82M
Balance Sheet
Total Assets	6.97B	4.39B	4.25B	3.70B	4.81B	2.41B
Cash, Cash Equivalents and Short-Term Investments	162.50M	398.07M	401.81M	288.77M	139.76M	206.74M
Total Debt	177.52M	217.89M	54.45M	70.27M	77.52M	74.75M
Total Liabilities	5.87B	3.16B	3.21B	2.85B	4.20B	1.94B
Stockholders Equity	1.10B	1.23B	1.03B	842.86M	613.46M	476.93M
Cash Flow
Free Cash Flow	444.27M	342.75M	366.57M	215.81M	102.47M	86.80M
Operating Cash Flow	476.02M	418.23M	384.60M	282.72M	155.05M	124.85M
Investing Cash Flow	-182.07M	-455.55M	-101.89M	-220.16M	-479.77M	48.42M
Financing Cash Flow	1.24B	-325.82M	141.65M	-1.43B	2.17B	280.54M

Paylocity Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 107.80
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• 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 Negative. The current price of 107.8 is below the 20-day moving average (MA) of 112.31, below the 50-day MA of 133.23, and below the 200-day MA of 160.08, indicating a bearish trend. The MACD of -7.97 indicates Negative momentum. The RSI at 38.17 is Neutral, neither overbought nor oversold. The STOCH value of 65.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PCTY.

Paylocity Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PEGA	71 Outperform	$7.54B	20.50	57.32%	0.16%	17.00%	120.21%
PCTY	70 Outperform	$5.81B	25.36	20.99%	―	13.30%	2.80%
PAYC	70 Outperform	$6.96B	15.57	27.42%	0.94%	9.72%	-2.69%
ESTC	63 Neutral	$5.48B	-66.47	-10.24%	―	16.98%	-265.85%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
TTAN	52 Neutral	$6.99B	-22.72	-36.41%	―	26.49%	-44.77%

Paylocity Corporate Events

Paylocity Shareholders Approve Key Proposals at Annual Meeting

At the Annual Meeting, Paylocity‘s shareholders voted on several key proposals. The election of directors saw all nominees elected, while KPMG LLP was ratified as the independent accounting firm for the fiscal year ending June 30, 2026. Additionally, shareholders approved the compensation of named executive officers and the Amended and Restated 2023 Equity Incentive Plan.

The most recent analyst rating on (PCTY) stock is a Buy with a $184.00 price target. To see the full list of analyst forecasts on Paylocity stock, see the PCTY Stock Forecast page.