Paylocity ( PCTY ) is a cloud payroll/human capital management [HCM] software provider based in the US that I have been following for a while. I covered PCTY the first time in 2020 , and theAnalyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in PCTY over the next 72 hours. I wrote this article myself, and it express ...

Financial Data and Key Metrics Changes - Recurring and other revenue for Q2 was $347.7 million, an increase of 17%, with total revenue of $377 million, up 16% from the same period last year [19][10] - Adjusted gross profit was 73.8% for Q2, compared to 72.7% in Q2 of the previous fiscal year, representing a 110 basis points improvement [20] - Adjusted EBITDA for Q2 was $126.2 million, or a 33.5% margin, exceeding the midpoint of guidance by $8.2 million [21] - Cash and cash equivalents at the end of the quarter were $482.4 million, with $325 million in debt related to the Airbase acquisition [22] Business Line Data and Key Metrics Changes - The launch of new products, including benefit decision support and integrated headcount planning, has increased the maximum revenue per employee (PEPY) from $550 to $600 [11] - The new AI assistant chatbot has seen a 30% increase in utilization since its launch in October, with key features reducing report search time by over 20% [12] Market Data and Key Metrics Changes - The broker referral network contributed over 25% of new business in Q2, driven by the modern platform and third-party integrations [15] - The average daily balance of client funds was approximately $2.8 billion in Q2, expected to rise to $3.2 billion in Q3 [22] Company Strategy and Development Direction - The company is focused on product innovation and expansion, with ongoing investments in R&D to enhance its platform for the modern workforce [20][11] - The integration of Airbase is seen as a strategic move to enhance the value proposition for clients, with plans for a unified platform over time [100][102] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to drive further product expansion and revenue growth, supported by a stable macroeconomic environment [14] - The company has raised its fiscal 2025 guidance due to strong sales performance and operational execution [25][27] Other Important Information - Paylocity was recognized in multiple awards, including Forbes' list of America's Most Trusted Companies and Fortune's Best Workplaces in Technology [18] - The company continues to utilize its share repurchase program, having repurchased approximately 40,000 shares in Q2 [24] Q&A Session Summary Question: How does the recent M&A activity in the market affect the broker channel? - Management believes that their strong relationships with brokers and the lack of competition in selling insurance products will allow them to capitalize on any disruptions caused by M&A activity [31][33] Question: Is there a renewed sense of optimism in the business? - Management confirmed a consistent optimistic approach towards growth and client service, indicating stability in the market [40][42] Question: What is the contribution of Airbase to revenue? - Airbase is expected to contribute roughly 1% of revenue this fiscal year, with the core business driving the larger guidance increase [56] Question: How is the company addressing the differences in market segments? - Management noted that while there are longer decision cycles in the upper market, stability has improved, and they are seeing gradual increases in attach rates for products [60][62] Question: What are the plans for integrating Airbase? - The integration will be a multi-year effort, with a focus on delivering a unified experience while also growing standalone revenue [102] Question: How is the labor market affecting business? - The macro environment has been stable, with modest upside expected in the first half of the fiscal year [112][113] Question: What is the outlook for gross margins? - Management is pleased with the expanded gross margins and is focused on balancing investments to drive efficiencies while maintaining service levels [115][118] Question: What is the level of client interest in Gen AI functionality? - There is strong client interest in the AI capabilities, with a focus on enhancing client satisfaction and efficiency [121][124]

Core Insights - Paylocity Holding Corporation (PCTY) shares increased by 4.24% to $221.00 in after-hours trading following strong second-quarter fiscal 2025 results [1] Financial Performance - PCTY reported non-GAAP earnings of $1.52 per share, exceeding the Zacks Consensus Estimate by 9.35%, with a year-over-year increase of 2% driven by strong sales, efficient operations, and acquisitions [2] - Revenues rose 16% year over year to $377 million, surpassing the Zacks Consensus Estimate by 2.77%, with recurring and other revenues increasing by 16.5% to $347.7 million [3] - Adjusted gross profit was $278.2 million, up 17.3% year over year, with an adjusted gross margin of 73.8%, an increase of 110 basis points [4] Operational Metrics - Non-GAAP operating income increased by 9% year over year to $101.1 million, while the non-GAAP operating margin contracted by 160 basis points to 26.8% [4] - Adjusted EBITDA rose 12% from the previous year to $126.2 million, with an adjusted EBITDA margin of 33.5%, down 100 basis points [4] Balance Sheet & Cash Flow - As of December 31, 2024, cash and cash equivalents were $482.4 million, down from $778.5 million as of September 30, 2024, with long-term debt totaling $325 million due to borrowings for the acquisition of Airbase [5] - Cash flow from operations for the second quarter was $54.2 million, compared to $75.1 million in the prior year, with free cash flow at $41.9 million [6] Guidance - For Q3 fiscal 2025, PCTY expects total revenues between $439 million and $444 million, indicating a 10% growth year over year, with adjusted EBITDA projected at $171 million to $175 million [7] - For the full fiscal 2025, total revenues are projected between $1.558 billion and $1.568 billion, implying an 11% growth year over year, with adjusted EBITDA expected to be between $542 million and $555 million [8] Market Position - PCTY currently holds a Zacks Rank 2 (Buy), indicating positive market sentiment [9]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ________________________________________________________________________ Form 10-Q ________________________________________________________________________ x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended December 31, 2024 o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Comm ...

Paylocity Holding Corporation (NASDAQ:PCTY) Q2 2025 Earnings Conference Call February 6, 2025 5:30 PM ET Company Participants Ryan Glenn - CFO Steve Beauchamp - Executive Chairman Toby Williams - President and CEO Conference Call Participants Brad Reback - Stifel Scott Berg - Needham & Company Samad Samana - Jefferies LLC Mark Marcon - Robert W. Baird Daniel Jester - BMO Capital Markets Austin Cole - Citizens JMP Siti Panigrahi - Mizuho Raimo Lenschow - Barclays Jared Levine - TD Cowen Terry Tillman - Truis ...

Group 1 - Paylocity Holding Corporation reported its earnings results for the second quarter of fiscal year 2025, which ended on December 31, 2024 [3] - The earnings call featured key company executives including Ryan Glenn (CFO), Steve Beauchamp (Executive Chairman), and Toby Williams (President and CEO) [3] - A webcast replay of the earnings call will be available for 45 days on the company's Investor Relations website [3] Group 2 - The conference call was initiated with a welcome message and instructions for participants, indicating that it was being recorded [2] - The call included a caution regarding forward-looking statements, highlighting that actual results may differ due to various factors and uncertainties [4][5]

Core Viewpoint - Paylocity (PCTY) reported quarterly earnings of $1.52 per share, exceeding the Zacks Consensus Estimate of $1.39 per share, and showing an increase from $1.49 per share a year ago [1][2] Financial Performance - The earnings surprise for the quarter was 9.35%, with the company previously expected to earn $1.39 per share but actually earning $1.66, resulting in a surprise of 19.42% [2] - Paylocity's revenues for the quarter ended December 2024 were $376.98 million, surpassing the Zacks Consensus Estimate by 2.77%, compared to $326.36 million in the same quarter last year [3] - The company has consistently exceeded consensus EPS and revenue estimates over the last four quarters [2][3] Stock Performance - Paylocity shares have increased approximately 4.8% since the beginning of the year, outperforming the S&P 500's gain of 3.1% [4] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations for it to outperform the market in the near future [7] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $2.04 on revenues of $434.29 million, and for the current fiscal year, it is $6.53 on revenues of $1.54 billion [8] - The Internet - Software industry, to which Paylocity belongs, is currently ranked in the top 30% of over 250 Zacks industries, suggesting a favorable outlook for the sector [9]

Financial Performance - Paylocity reported a total revenue of $377.0 million for Q2 FY 2025, representing a 16% increase year-over-year[7]. - Recurring and other revenue reached $347.7 million in Q2 FY 2025, up 17% compared to the same quarter in FY 2024[6]. - GAAP net income for Q2 FY 2025 was $37.5 million, or $0.66 per share, slightly down from $38.1 million, or $0.67 per share, in Q2 FY 2024[4]. - Adjusted EBITDA for Q2 FY 2025 was $126.2 million, an increase from $112.6 million in Q2 FY 2024[8]. - Total revenues for the three months ended December 31, 2023, were $326.4 million, an increase of 15.5% compared to $376.9 million for the same period in 2024[21]. - Net income for the six months ended December 31, 2023, was $72.6 million, representing a 19.7% increase from $87.0 million for the same period in 2024[21]. - Operating income for the three months ended December 31, 2023, was $49.7 million, a decrease of 4.4% compared to $46.6 million for the same period in 2024[21]. - Non-GAAP net income for the three months ended December 31, 2023, was $84.5 million, compared to $86.0 million for the same period in 2024[25]. - The company reported a net income of $38,116 for Q4 2023, a slight increase from $37,465 in Q4 2024, representing a growth of 1.7%[26]. Cash Flow and Guidance - Cash flow from operations for the first six months of FY 2025 was $145.7 million, compared to $137.2 million for the same period in FY 2024[9]. - Paylocity expects recurring and other revenue for Q3 FY 2025 to be in the range of $410.0 million to $415.0 million, indicating approximately 12% growth over Q3 FY 2024[15]. - Total revenue guidance for FY 2025 is projected to be between $1.558 billion and $1.568 billion, reflecting approximately 11% growth over FY 2024[15]. - Cash flows from operating activities for the six months ended December 31, 2023, were $137.2 million, compared to $145.7 million for the same period in 2024[23]. - Free cash flow for the first half of 2024 was $110,746, an increase of 9.5% from $101,587 in the first half of 2023[27]. - Adjusted free cash flow excluding interest income on funds held for clients for the first half of 2024 was $56,702, up 14% from $49,758 in the first half of 2023[27]. Expenses and Investments - The company’s total operating expenses for the six months ended December 31, 2023, were $344.2 million, an increase from $389.7 million for the same period in 2024[21]. - Stock-based compensation expense for the six months ended December 31, 2023, was $82.2 million, compared to $77.2 million for the same period in 2024[23]. - Non-GAAP sales and marketing expenses for Q4 2023 were $69,621, a decrease of 15.5% from $81,950 in Q4 2024[26]. - Non-GAAP total research and development expenses for Q4 2023 were $49,726, an increase of 13.5% from $57,791 in Q4 2024[26]. - General and administrative expenses for Q4 2023 were $43,340, up 30.4% from $56,524 in Q4 2024[27]. Product Development - The company launched new products, including Benefits Decision Support and Headcount Planning, which contributed to an increase in average revenue per client to $600[2]. - Paylocity's sustained investment in R&D is driving product differentiation and operational execution, contributing to strong sales performance[2]. Balance Sheet - As of December 31, 2024, cash and cash equivalents totaled $482.4 million, while long-term debt stood at $325.0 million[8]. - The company’s cash and cash equivalents at the end of the period were $3.1 billion, up from $2.8 billion at the beginning of the period[23].

Core Insights - Paylocity Holding Corporation reported strong financial results for the second quarter of fiscal year 2025, with continued momentum from Q1 leading to increased revenue and profitability guidance for the fiscal year [2][10]. Financial Performance - Total revenue for Q2 2025 was $377.0 million, representing a 16% increase year-over-year [8][9]. - Recurring and other revenue reached $347.7 million, up 17% from the same quarter in the previous year [7][8]. - GAAP operating income was $46.6 million, while non-GAAP operating income was $101.1 million, compared to $49.7 million and $92.8 million respectively in Q2 2024 [3][4]. - GAAP net income for Q2 2025 was $37.5 million, or $0.66 per share, compared to $38.1 million, or $0.67 per share in Q2 2024 [4][9]. - Adjusted EBITDA for Q2 2025 was $126.2 million, an increase from $112.6 million in Q2 2024 [9][30]. Balance Sheet and Cash Flow - As of December 31, 2024, cash and cash equivalents totaled $482.4 million, while long-term debt stood at $325.0 million [9][26]. - Cash flow from operations for the first six months of fiscal year 2025 was $145.7 million, compared to $137.2 million for the same period in fiscal year 2024 [9][26]. Business Outlook - For Q3 2025, recurring and other revenue is expected to be between $410.0 million and $415.0 million, indicating approximately 12% growth over Q3 2024 [17]. - Total revenue guidance for fiscal year 2025 is projected to be between $1.558 billion and $1.568 billion, representing approximately 11% growth over fiscal year 2024 [17].

Core Insights - Paylocity has introduced enhancements to its Recruiting platform aimed at simplifying and accelerating hiring processes while improving candidate search quality [1][8] - The updates address challenges faced by high-volume hiring teams in industries such as retail and hospitality, focusing on streamlining workflows and enabling data-driven decision-making [2][8] Key Innovations - Streamlined scheduling for recruiters through integration with Microsoft Outlook, Gmail, and iCloud, allowing real-time availability access and synchronized updates [4] - Candidate interview self-scheduling feature that allows candidates to book interviews at their convenience, reducing delays and improving the scheduling process [5] - One-way video interviews that enable candidates to respond to screening questions via video, significantly speeding up the initial screening phase [6] - Integrated candidate assessments that allow recruiters to manage pre-hire assessments within the same workflow, simplifying the evaluation process [7] Transforming Experiences - The enhanced Recruiting platform focuses on reducing friction in the hiring process, providing actionable dashboards and collaboration tools to empower teams in making smarter, faster hiring decisions [8] Availability - The new features, including Integrated Candidate Assessments, Scheduling, and Candidate Profiles, are available now, while One-Way Video Interviews will be launched later in the spring [9] Company Overview - Paylocity, headquartered in Schaumburg, IL, is a cloud-based provider of HR, payroll, and spend management software solutions, recognized for its user-friendly products and unique workplace culture [10]