Paylocity (PCTY) AI Stock Analysis

• Market Cap: $9.11B
• Dividend Yield: N/A
• Average Volume (3M): 526.33K
• Price to Earnings (P/E): 40.8
• Beta (1Y): 0.64
• Revenue Growth: 13.74%
• EPS Growth: 10.99%
• Country: US
• Employees: 6,400
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.56
• Shares Outstanding: 55,161,630
• 10 Day Avg. Volume: 534,864
• 30 Day Avg. Volume: 526,328
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.10
• Enterprise Value/Revenue: 6.65
• Enterprise Value/Gross Profit: 9.69
• Enterprise Value/Ebitda: 26.95
• 1Y Price Target: $222.07
• Price Target Upside: 35.66% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16

• Rating: 75 Outperform
• Price Target: $202.00 ▲(23.40% Upside)

Paylocity's strong financial performance and strategic corporate actions, such as the share buyback program, are significant strengths. However, technical indicators suggest potential short-term weakness, and the high P/E ratio raises valuation concerns. The earnings call provided a balanced view with strong growth but highlighted some risks, such as interest rate impacts and reliance on the broker channel.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, supporting long-term financial stability.

Product Expansion

The launch of 'Paylocity for Finance' enhances product offerings, potentially increasing client retention and attracting new customers.

Share Buyback Program

The expanded buyback program reflects confidence in financial health and commitment to shareholder value, enhancing investor trust.

Negative Factors

Interest Rate Impact

Interest rate changes could affect income from client-held funds, potentially impacting profitability and financial forecasts.

Higher Sales and Marketing Expenses

Increased sales and marketing costs may pressure margins, requiring careful management to maintain profitability.

Dependency on Broker Channel

Reliance on the broker channel for new business poses a risk if market conditions change, potentially affecting growth.

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 software-as-a-service (SaaS) offerings. The company has a diverse range of revenue streams, including payroll processing fees, HCM software subscriptions, and additional services such as employee benefits management and time and attendance tracking. Paylocity's pricing model typically involves a recurring subscription charged on a per-employee basis, which provides a steady stream of income as businesses scale. Additionally, the company may earn revenue from upselling premium features and services to existing clients. Strategic partnerships with various organizations in the HR technology ecosystem also contribute to its revenue, enhancing its service offerings and expanding its market reach.

Paylocity Financial Statement Overview

Summary

Paylocity exhibits strong financial health with consistent revenue and profit growth, effective cost management, and a solid balance sheet. The company has successfully reduced its leverage while maintaining robust returns on equity. Cash flow generation is strong, supporting its growth trajectory. Potential risks include fluctuations in EBIT margins and asset management, which should be monitored to sustain long-term financial stability.

Income Statement

Paylocity has demonstrated consistent revenue growth over the years, with a notable increase from $561 million in 2020 to $1.6 billion in 2025. The gross profit margin has remained stable around 68%, indicating strong cost management. The net profit margin has improved from 11.5% in 2020 to 14.2% in 2025, reflecting enhanced profitability. However, the EBIT margin showed a decline in 2025, which could indicate increased operational costs or investments.

Balance Sheet

The company's debt-to-equity ratio has decreased significantly from 0.44 in 2020 to 0.17 in 2025, indicating reduced leverage and a stronger equity position. Return on equity has remained robust, averaging around 18% in recent years, showcasing effective utilization of shareholder funds. The equity ratio is healthy, suggesting a solid financial structure, although the total assets have fluctuated, which may require monitoring.

Cash Flow

Paylocity's operating cash flow has shown a positive trend, increasing from $112 million in 2020 to $418 million in 2025. The free cash flow growth rate has been strong, particularly in recent years, indicating efficient cash management. The operating cash flow to net income ratio is nearly 2, suggesting strong cash generation relative to earnings. However, the free cash flow to net income ratio has slightly decreased, which could imply increased capital expenditures.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.51B	1.60B	1.40B	1.17B	852.65M	635.63M
Gross Profit	1.03B	1.10B	960.79M	807.56M	565.65M	416.33M
EBITDA	371.58M	403.66M	336.52M	215.89M	134.81M	101.02M
Net Income	212.28M	227.13M	206.77M	140.82M	90.78M	70.82M
Balance Sheet
Total Assets	5.17B	4.39B	4.25B	3.70B	4.81B	2.41B
Cash, Cash Equivalents and Short-Term Investments	477.79M	398.07M	401.81M	288.77M	139.76M	206.74M
Total Debt	301.02M	217.89M	54.45M	70.27M	77.52M	74.75M
Total Liabilities	3.96B	3.16B	3.21B	2.85B	4.20B	1.94B
Stockholders Equity	1.21B	1.23B	1.03B	842.86M	613.46M	476.93M
Cash Flow
Free Cash Flow	381.34M	342.75M	305.92M	215.81M	102.47M	86.80M
Operating Cash Flow	411.52M	418.23M	384.67M	282.72M	155.05M	124.85M
Investing Cash Flow	-354.02M	-455.55M	-101.89M	-220.16M	-479.77M	48.42M
Financing Cash Flow	-242.31M	-325.82M	141.58M	-1.43B	2.17B	280.48M

Paylocity Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 163.69
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• 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 163.69 is below the 20-day moving average (MA) of 170.17, below the 50-day MA of 176.88, and below the 200-day MA of 189.43, indicating a bearish trend. The MACD of -3.60 indicates Positive momentum. The RSI at 35.79 is Neutral, neither overbought nor oversold. The STOCH value of 25.02 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
PAYC	77 Outperform	12.59B	29.07	31.85%	0.69%	10.21%	-10.56%
DAY	76 Outperform	10.87B	226.81	0.71%	―	13.46%	2.06%
PCTY	75 Outperform	$9.11B	40.78	20.04%	―	13.74%	10.99%
PEGA	71 Outperform	10.04B	50.42	35.26%	0.13%	12.47%	65.19%
ESTC	65 Neutral	9.13B	-107.64	-8.60%	―	17.42%	-228.98%
TTAN	54 Neutral	9.77B	-29.66	-16.44%	―	26.45%	-74.34%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Paylocity Corporate Events

Paylocity Expands Share Buyback Program by $500 Million

On August 5, 2025, Paylocity announced a $500 million increase to its share repurchase program, adding to the $200 million remaining from previous authorizations. This move, alongside the launch of Paylocity for Finance, aims to enhance its market position by integrating HR and finance functions, driving efficiency and user experience. The company reported strong financial results for fiscal year 2025, with a 14% increase in total revenue and a 15% rise in recurring revenue year-over-year. Paylocity also repurchased 800,000 shares for $150 million during the fiscal year, reflecting its commitment to returning capital to shareholders.