Paylocity (PCTY)
NASDAQ:PCTY
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Paylocity
(NASDAQ:PCTY)
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Rating:80Outperform
Price Target:
$128.00
▲(27.01% Upside)
Action:ReiteratedDate:05/09/26
The score is driven primarily by strong financial performance (scaling revenue, robust margins, low leverage, and expanding free cash flow) and a positive earnings update with raised FY26 guidance and continued capital returns. Valuation is supportive with a relatively low P/E. Technicals temper the rating because the stock remains below longer-term moving averages despite improving near-term momentum.
Positive Factors
Recurring revenue scale
Sustained multi-year revenue growth reflects durable demand for Paylocity's subscription HCM platform and successful customer acquisition and expansion. A growing recurring base increases predictable cash flow, supports long-term investment, and strengthens customer lock-in via integrated modules and cross-sell.
Negative Factors
Interest income sensitivity
A meaningful portion of adjusted EBITDA and guidance depends on yields from client‑held funds, making earnings materially sensitive to interest rates and average client balances. Rate declines or lower client balances could reduce reported profitability and complicate multi‑period planning.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring revenue scale
Sustained multi-year revenue growth reflects durable demand for Paylocity's subscription HCM platform and successful customer acquisition and expansion. A growing recurring base increases predictable cash flow, supports long-term investment, and strengthens customer lock-in via integrated modules and cross-sell.
Read all positive factors
Paylocity (PCTY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.98B
Dividend YieldN/A
Average Volume (3M)728.17K
Price to Earnings (P/E)13.2
Beta (1Y)0.70
Revenue Growth11.31%
EPS Growth16.71%
CountryUS
Employees6,400
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)4.74
Shares Outstanding53,876,694
10 Day Avg. Volume910,462
30 Day Avg. Volume728,170
Financial Highlights & Ratios
PEG Ratio4.08
Price to Book (P/B)8.17
Price to Sales (P/S)6.32
P/FCF Ratio29.42
Enterprise Value/Market Cap0.97
Enterprise Value/Revenue3.36
Enterprise Value/Gross Profit4.85
Enterprise Value/Ebitda14.70
Forecast
1Y Price Target
$151.78Price Target Upside50.60% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering18
EPS Forecast (FY)7.77
Revenue Forecast (FY)$1.74B
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 man...
How the Company Makes Money
Paylocity primarily makes money by selling subscription access to its cloud HCM platform and charging for ongoing services tied to delivering and supporting those products. Its revenue model is largely recurring and is typically built from (1) sof...
Paylocity Key Performance Indicators (KPIs)
Paylocity Earnings Call Summary
Earnings Call Date:May 07, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Positive
The call emphasized strong top‑line recurring revenue growth (+11.6% in Q3), margin expansion, robust free cash flow and active capital return while raising fiscal year guidance. Management highlighted product momentum (AI embedding, Grayscale acquisition) and channel strength (broker referrals >25%). Principal near‑term risks are continued investment-driven timing on margins, reliance on interest income assumptions tied to rates and early‑stage execution/monetization risks for new services. On balance, positive operational and financial execution materially outweigh the noted near‑term risks.Positive Updates
Strong recurring revenue growth and guidance beat
Q3 recurring and other revenue of $469.9M, up 11.6% year‑over‑year, beating the high end of guidance by $7.4M; total revenue up 10.5% YoY and $10.3M above the top end of total revenue guidance.
Negative Updates
Near-term margin timing and investment bias
Management emphasized continued investments in R&D and sales & marketing; R&D total investment increased 8.9% YoY. That investment bias and timing drove commentary that Q4 EBITDA guidance reflects timing/near-term investment, with the Q4 recurring revenue growth guide (9%–10%) below Q3's 11.6% rate.
Read all updates
Q3-2026 Updates
Positive
Negative
Strong recurring revenue growth and guidance beat
Q3 recurring and other revenue of $469.9M, up 11.6% year‑over‑year, beating the high end of guidance by $7.4M; total revenue up 10.5% YoY and $10.3M above the top end of total revenue guidance.
Read all positive updates
Company Guidance
Management raised FY‑26 guidance after Q3, increasing recurring & other revenue guidance by $15.5M and total revenue guidance by $20.5M at the midpoint: FY‑26 recurring & other revenue $1.638–1.643B (~11–12% YoY) and total revenue $1.755–1.760B (~10% YoY); adjusted EBITDA $638–642M and adjusted EBITDA excluding interest on client funds $521–525M. Q4 guidance calls for recurring & other revenue $402.2–407.2M (~9–10% YoY) and total revenue $428.4–433.4M (~7–8% YoY), with adjusted EBITDA $128.6–132.6M (or $102.4–106.4M excluding interest on client funds). Management expects average client‑held funds to be ~ $3.2B in Q4 (Q3 average diluted balance was $3.8B) with a Q4 yield ≈330 bps (~$26.2M interest income) and a FY average balance ≈$3.25B at ≈360 bps (~$117M interest income); guidance assumes Fed cuts to date only. They also highlighted Q3 results that supported the raise: Q3 adjusted EBITDA $220.2M (43.8% margin), adjusted gross profit 77.3% (up 30 bps YoY; 60 bps leverage through 9 months), stronger free cash flow (27% increase in cash from ops YTD, 25.4% FCF growth over last 12 months, >24% FCF margin) and continued capital returns (Q3 cash $299.7M, $81.3M debt, ~2.3M shares repurchased YTD ~$350M and an additional $1B repurchase authorization).Paylocity Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
84
Very Positive
Cash Flow
88
Very Positive
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.73B | 1.60B | 1.40B | 1.17B | 852.65M | 635.63M |
| Gross Profit | 1.20B | 1.10B | 960.79M | 807.56M | 565.65M | 416.33M |
| EBITDA | 394.81M | 403.66M | 336.52M | 215.89M | 134.81M | 101.02M |
| Net Income | 258.04M | 227.13M | 206.77M | 140.82M | 90.78M | 70.82M |
Balance Sheet | ||||||
| Total Assets | 5.44B | 4.39B | 4.25B | 3.70B | 4.81B | 2.41B |
| Cash, Cash Equivalents and Short-Term Investments | 299.73M | 398.07M | 401.81M | 288.77M | 139.76M | 206.74M |
| Total Debt | 125.19M | 217.89M | 54.45M | 70.27M | 77.52M | 74.75M |
| Total Liabilities | 4.26B | 3.16B | 3.21B | 2.85B | 4.20B | 1.94B |
| Stockholders Equity | 1.18B | 1.23B | 1.03B | 842.86M | 613.46M | 476.93M |
Cash Flow | ||||||
| Free Cash Flow | 470.12M | 342.75M | 366.57M | 215.81M | 102.47M | 86.80M |
| Operating Cash Flow | 507.93M | 418.23M | 384.60M | 282.72M | 155.05M | 124.85M |
| Investing Cash Flow | -180.71M | -455.55M | -101.89M | -220.16M | -479.77M | 48.42M |
| Financing Cash Flow | -188.90M | -325.82M | 141.65M | -1.43B | 2.17B | 280.54M |
Paylocity Technical Analysis
Negative
100.78
Price Trends
108.47
Negative
127.34
Negative
146.87
Negative
Market Momentum
-3.62
Positive
41.78
Neutral
45.82
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 100.78 is below the 20-day moving average (MA) of 104.75, below the 50-day MA of 108.47, and below the 200-day MA of 146.87, indicating a bearish trend. The MACD of -3.62 indicates Positive momentum. The RSI at 41.78 is Neutral, neither overbought nor oversold. The STOCH value of 45.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PCTY.
Paylocity Risk Analysis
Paylocity disclosed 29 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $5.98B | 13.18 | 22.36% | ― | 11.31% | 16.71% | |
74 Outperform | $6.52B | 9.97 | 31.03% | 0.94% | 9.37% | 23.47% | |
69 Neutral | $6.01B | 54.82 | 50.21% | 0.16% | 3.50% | 75.14% | |
63 Neutral | $5.41B | 224.68 | -9.44% | ― | 17.29% | 38.72% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | $6.01B | -46.12 | -10.70% | ― | 24.50% | 53.16% |
* Technology Sector Average
PCTY
Paylocity
110.98
-87.78
-44.16%
PEGA
Pegasystems
35.98
-12.06
-25.10%
PAYC
Paycom
136.87
-119.43
-46.60%
ESTC
Elastic
52.25
-40.51
-43.67%
TTAN
ServiceTitan, Inc. Class A
63.04
-58.84
-48.28%
Paylocity Corporate Events
Business Operations and StrategyStock BuybackFinancial DisclosuresM&A Transactions
Paylocity Expands Share Buyback and Advances AI Strategy
Positive
May 7, 2026
Paylocity Holding Corporation is a Nasdaq-listed provider of cloud-based HCM, finance and IT software headquartered in Schaumburg, Ill., offering a unified, AI-enabled platform that helps businesses automate HR, finance and IT workflows, manage sp...
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.