Paylocity (PCTY)
NASDAQ:PCTY
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Paylocity
(NASDAQ:PCTY)
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Rating:70Outperform
Price Target:
$111.00
▲(10.14% Upside)
Action:ReiteratedDate: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 subscription model
A largely per-employee, per-month subscription model with service fees creates durable recurring revenue and high visibility into near-term cash flows. This structure supports predictable ARR expansion, easier cross-sell of modules, and revenue resilience across economic cycles over the next 2–6 months.
Negative Factors
Moderating revenue growth
Top-line acceleration has cooled from prior years and growth has become more variable, limiting the pace at which scale advantages compound. Slower revenue expansion can compress future operating leverage and makes multi-quarter planning for R&D and sales investments more uncertain.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring subscription model
A largely per-employee, per-month subscription model with service fees creates durable recurring revenue and high visibility into near-term cash flows. This structure supports predictable ARR expansion, easier cross-sell of modules, and revenue resilience across economic cycles over the next 2–6 months.
Read all positive factors
Paylocity (PCTY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.42B
Dividend YieldN/A
Average Volume (3M)737.00K
Price to Earnings (P/E)41.4
Beta (1Y)0.68
Revenue Growth13.30%
EPS Growth2.80%
CountryUS
Employees6,400
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.85
Shares Outstanding53,876,694
10 Day Avg. Volume881,635
30 Day Avg. Volume737,004
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 Cap1.01
Enterprise Value/Revenue3.27
Enterprise Value/Gross Profit4.74
Enterprise Value/Ebitda12.32
Forecast
1Y Price Target
$166.27Price Target Upside64.98% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering17
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:Feb 05, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call highlighted broad top-line growth (10% total revenue, 11% recurring revenue), meaningful margin and free cash flow improvement, strong product momentum (AI, HCM enhancements, Airbase integration), and active capital returns via share repurchases. Management raised fiscal 2026 guidance and emphasized continued investment in R&D and go-to-market while embedding AI across the platform. Potential areas of caution include sensitivity of forecasts to interest income and Fed assumptions, a conservative employment assumption for the back half, reinvestment of some beat into growth initiatives rather than fully accelerating margin, and early-stage contribution from finance/IT products. Overall, the positives materially outweigh the manageable risks discussed on the call.Positive Updates
Top-Line Growth
Total revenue of $416.1M, up 10% year-over-year; recurring and other revenue of $387.0M, up 11% year-over-year.
Negative Updates
Interest Income and Guidance Sensitivity
Interest income assumptions are material to results and guidance: average daily client funds were ~$3.2B in Q2, guided to ~$3.7B in Q3 at a ~3.20% yield (≈$29.5M interest income) and full-year average yield ~3.40% (≈$112M interest income). Outcomes are sensitive to interest rate moves and Fed cut assumptions (guidance assumes additional 25 bps cuts in March and April).
Read all updates
Q2-2026 Updates
Positive
Negative
Top-Line Growth
Total revenue of $416.1M, up 10% year-over-year; recurring and other revenue of $387.0M, up 11% year-over-year.
Read all positive updates
Company Guidance
Paylocity raised its fiscal 2026 outlook after beating Q2, increasing recurring and other revenue guidance by $12.5M and total revenue guidance by $14.5M; Q3 recurring and other revenue is guided to $457.5M–$462.5M (≈9%–10% y/y) and Q3 total revenue to $487M–$492M (≈7%–8% y/y), with Q3 adjusted EBITDA of $200M–$204M (or $170.5M–$174.5M excluding interest on client funds). Full-year fiscal 2026 guidance is recurring and other revenue $1.62B–$1.63B (≈10%–11% y/y), total revenue $1.732B–$1.742B (≈9% y/y), adjusted EBITDA $622.5M–$630.5M (or $510.5M–$518.5M ex-interest). Management also provided interest-income assumptions tied to client funds (Q2 average daily client funds ~$3.2B; Q3 est. ~$3.7B at ~320 bps → ≈$29.5M interest in Q3; full year avg ~$3.3B at ~340 bps → ≈$112M), noted adjusted gross profit improvement (Q2 adjusted gross profit 74.4% vs 73.8% Y/Y, +60 bps; 1H up 80 bps), highlighted Q2 adjusted EBITDA of $142.7M (34.3% margin, $7.2M above guidance) and strong cash generation (≈40% increase in operating cash in 1H, 26% LTM FCF growth, ~24% LTM FCF margin), and reiterated capital return with ~690k shares repurchased in Q2 (~$100M), ~1.8M YTD (~$300M) and ≈$400M remaining authorization.Paylocity Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
84
Very Positive
Cash Flow
81
Very Positive
| 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
Negative
100.78
Price Trends
108.99
Negative
127.77
Negative
147.28
Negative
Market Momentum
-3.82
Positive
41.55
Neutral
40.12
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 105.26, below the 50-day MA of 108.99, and below the 200-day MA of 147.28, indicating a bearish trend. The MACD of -3.82 indicates Positive momentum. The RSI at 41.55 is Neutral, neither overbought nor oversold. The STOCH value of 40.12 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 |
|---|---|---|---|---|---|---|---|
71 Outperform | $7.23B | 25.92 | 60.07% | 0.16% | 17.00% | 120.21% | |
71 Outperform | $6.71B | 19.61 | 26.06% | 0.94% | 9.72% | -2.69% | |
70 Outperform | $5.42B | 41.43 | 20.52% | ― | 13.30% | 2.80% | |
63 Neutral | $4.92B | 224.68 | -9.44% | ― | 16.98% | -265.85% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | $5.90B | -44.16 | -10.70% | ― | 26.49% | -44.77% |
* Technology Sector Average
PCTY
Paylocity
100.78
-78.74
-43.86%
PEGA
Pegasystems
43.61
9.52
27.92%
PAYC
Paycom
126.93
-88.23
-41.01%
ESTC
Elastic
47.56
-28.11
-37.15%
TTAN
ServiceTitan, Inc. Class A
64.31
-53.40
-45.37%
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.