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Paylocity (PCTY)
NASDAQ:PCTY
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Paylocity
(NASDAQ:PCTY)
78Outperform
Positive Factors
Earnings
Paylocity reported strong results and raised full year guidance, indicating a strong performance despite a challenging macroeconomic environment.
Growth Opportunities
The integration of finance and spend management provider Airbase is complete, offering Paylocity new growth opportunities by targeting the CFO office.
Market Position
Paylocity is viewed as an attractive opportunity for long-term capital appreciation due to its rapid innovation and product differentiation.
Negative Factors
Integration Risks
The Airbase integration remains in the early stage, with management targeting an integrated employee experience as a core differentiator.
Macroeconomic Risks
There is a risk of seat contraction and lengthening sales cycles due to the challenging macroeconomic environment, which poses near-term risks.
Paylocity (PCTY) vs. S&P 500 (SPY)
Market Cap
$11.07B
Dividend YieldN/A
Average Volume (3M)415.96K
Price to Earnings (P/E)50.0
Beta (1Y)0.88
Revenue Growth14.63%
EPS Growth17.15%
CountryUS
Employees6,400
SectorTechnology
Sector Strength77
IndustrySoftware - Application
Share Statistics
EPS (TTM)2.43
Shares Outstanding55,230,110
10 Day Avg. Volume385,132
30 Day Avg. Volume415,963
Financial Highlights & Ratios
PEG Ratio14.48
Price to Book (P/B)8.99
Price to Sales (P/S)0.00
P/FCF Ratio28.19
Enterprise Value/Market Cap0.95
Enterprise Value/Revenue1.79
Enterprise Value/Gross Profit9.91
Enterprise Value/Ebitda7.66
Forecast
1Y Price Target
$227.86Price Target Upside13.61% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering17
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 exhibits strong financial health characterized by impressive revenue and profit growth, efficient cost management, and solid cash flow generation. The company maintains a stable balance sheet with prudent leverage, though further improvements in equity ratios would enhance financial resilience. Overall, Paylocity is well-positioned for continued growth and profitability in the software application industry.Income Statement
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.89
Very Positive
Balance Sheet
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.80
Positive
Cash Flow
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.85
Very Positive
| 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 | EBIT |
| 302.12M | 260.09M | 155.03M | 84.59M | 58.04M | 66.17M | EBITDA |
| 348.62M | 336.52M | 215.89M | 134.81M | 101.02M | 104.08M | Net Income Common Stockholders |
| 227.34M | 206.77M | 140.82M | 90.78M | 70.82M | 64.45M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 492.69M | 401.81M | 288.77M | 139.76M | 206.74M | 285.41M | Total Assets |
| 4.95B | 4.25B | 3.70B | 4.81B | 2.41B | 1.99B | Total Debt |
| 56.91M | 54.45M | 62.47M | 77.52M | 67.20M | 173.30M | Net Debt |
| -435.79M | -347.36M | -226.30M | -62.24M | -135.09M | -77.55M | Total Liabilities |
| 3.85B | 3.21B | 2.85B | 4.20B | 1.94B | 1.59B | Stockholders Equity |
| 1.10B | 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
Positive
200.56
Price Trends
189.20
Positive
196.01
Positive
186.59
Positive
Market Momentum
3.36
Negative
62.39
Neutral
93.34
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PCTY, the sentiment is Positive. The current price of 200.56 is above the 20-day moving average (MA) of 193.26, above the 50-day MA of 189.20, and above the 200-day MA of 186.59, indicating a bullish trend. The MACD of 3.36 indicates Negative momentum. The RSI at 62.39 is Neutral, neither overbought nor oversold. The STOCH value of 93.34 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $15.03B | 37.11 | 24.99% | 0.58% | 9.86% | -14.34% | |
80 Outperform | $14.59B | 61.15 | 25.20% | 0.52% | 10.71% | -27.64% | |
78 Outperform | $11.07B | 50.01 | 19.70% | ― | 14.63% | 17.15% | |
78 Outperform | $9.52B | 367.92 | 1.03% | ― | 14.97% | -51.02% | |
71 Outperform | $11.72B | 54.69 | 89.60% | ― | 9.18% | 14.35% | |
60 Neutral | $11.59B | 10.34 | -7.15% | 2.94% | 7.49% | -10.88% |
* Technology Sector Average
Performance Comparison
PCTY
Paylocity
200.56
27.98
16.21%
MANH
Manhattan Associates
191.85
-33.82
-14.99%
PAYC
Paycom
260.69
82.42
46.23%
DAY
Dayforce Inc
58.83
-2.22
-3.64%
BSY
Bentley Systems
48.06
-8.36
-14.82%
Paylocity Earnings Call Summary
Earnings Call Date:May 01, 2025
(Q3-2025)
| % Change Since: 3.30%|
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.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.