Paylocity Q1 FY2027 revenue rises 10.7% to $452M
Management cited an increase to fiscal 2027 revenue and profitability guidance heading into the heart of selling season.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
8-K
Rhea-AI Filing Summary
Paylocity Holding Corp. reported first-quarter fiscal 2027 total revenue of $451.7 million, up 10.7% year over year; recurring and other revenue was $424.5 million, up 12.0%. GAAP net income was $57.6 million, or $1.07 per diluted share, compared with $48.0 million, or $0.86, a year earlier. GAAP operating income was $82.2 million versus $74.2 million, while non-GAAP adjusted EBITDA was $159.5 million versus $146.4 million.
Quarterly net cash provided by operating activities was $79.7 million, compared with $86.5 million a year earlier; trailing-twelve-month operating cash flow was $526.5 million versus $413.2 million. Paylocity expects full-year fiscal 2027 total revenue of $1.910 billion to $1.925 billion, approximately 8% growth, and recurring and other revenue of $1.792 billion to $1.807 billion, approximately 9% growth. It completed its acquisition of Aidora Inc. in July 2026 and repurchased $152.5 million, or 1.1 million shares, during the quarter.
3 points · 0 major0 major · 1 point
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointTotal revenue increased 10.7% year over year to $451.7 million.
- Moderate pointGAAP net income reached $57.6 million, versus $48.0 million a year earlier.
- Minor pointRecurring and other revenue rose 12.0% year over year to $424.5 million.
Negative
- Minor pointQuarterly operating cash flow was $79.7 million, versus $86.5 million a year earlier.
Filing Explained
At September 30, 52,307 thousand common shares were issued and outstanding, versus 53,271 thousand at June 30.
The first-quarter filing reports
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, or exhibit attachments filed with this report.
Key Figures
Total revenue: $451.7 million
Recurring and other revenue: $424.5 million
GAAP net income: $57.6 million
+5 more
8 metrics
Total revenue
$451.7 million
First quarter fiscal 2027; up 10.7% year over year
Recurring and other revenue
$424.5 million
First quarter fiscal 2027; up 12.0% year over year
GAAP net income
$57.6 million
First quarter fiscal 2027; compared with $48.0 million in the prior-year quarter
Diluted earnings per share
$1.07
First quarter fiscal 2027; compared with $0.86 in the prior-year quarter
Adjusted EBITDA
$159.5 million
Non-GAAP measure; first quarter fiscal 2027, compared with $146.4 million
Net cash provided by operating activities
$79.7 million
First three months of fiscal 2027, compared with $86.5 million in the prior-year period
Full fiscal 2027 total revenue guidance
$1.910 billion to $1.925 billion
Approximately 8% growth over fiscal 2026 total revenue
Q1 share repurchases
$152.5 million; 1.1 million shares
First quarter fiscal 2027
Key Terms
Recurring and other revenue, Adjusted EBITDA, Funds held for clients, Diluted weighted-average number of common shares, +1 more
5 terms
Recurring and other revenue financial
"Recurring and other revenue was $424.5 million"
Adjusted EBITDA financial
"Adjusted EBITDA, a non-GAAP measure"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Funds held for clients financial
"interest income on funds held for clients"
Money a financial firm or service provider keeps on behalf of its customers rather than claiming it as the firm’s own cash. Like a bank holding your paycheck in a locked safe for you, these client funds are kept separate to protect customers and meet legal rules; for investors, that separation matters because it reduces the firm’s usable cash, creates custody and reputational risk if mishandled, and affects how the company reports liabilities and liquidity.
Free cash flow financial
"Free cash flow is defined as net cash provided by operating activities"
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
Earnings Snapshot
Total revenue: $451.7 million · Guidance included
First quarter fiscal 2027, ended September 30, 2026
Total revenue
$451.7 million
Up 10.7% year over year
Recurring and other revenue
$424.5 million
Up 12.0% year over year
GAAP net income
$57.6 million
Compared with $48.0 million in the prior-year quarter
Adjusted EBITDA
$159.5 million
Compared with $146.4 million in the prior-year quarter
Net cash provided by operating activities
$79.7 million
Compared with $86.5 million in the prior-year period
Guidance
For the second quarter of fiscal 2027, recurring and other revenue is expected to be $423.0 million to $428.0 million, total revenue $452.5 million to $457.5 million, Adjusted EBITDA $152.5 million to $156.5 million, and Adjusted EBITDA excluding interest income on funds held for clients $123.0 million to $127.0 million. For full fiscal 2027, recurring and other revenue is expected to be $1.792 billion to $1.807 billion, total revenue $1.910 billion to $1.925 billion, Adjusted EBITDA $711.5 million to $721.5 million, and Adjusted EBITDA excluding interest income on funds held for clients $593.5 million to $603.5 million.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much stock did PCTY repurchase in Q1 fiscal 2027?
Paylocity repurchased $152.5 million, or 1.1 million shares, in the quarter; since May 2024, it had repurchased $850.2 million, or 5.7 million shares.
How much cash and long-term debt did PCTY report?
As of September 30, 2026, Paylocity reported $194.5 million in cash and cash equivalents and $131.3 million in long-term debt.
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 5, 2026
(Exact name of registrant as specified in its charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) | ||||||
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 5, 2026, Paylocity Holding Corporation (the “Company”) issued a press release announcing financial results for the three month period ended September 30, 2026. The press release contains forward-looking statements regarding the Company and includes cautionary statements identifying important factors that could cause actual results to differ materially from those anticipated.
The press release issued November 5, 2026 is furnished herewith as Exhibit 99.1. The information in this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that Section, nor shall such information be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as otherwise stated in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |||||||
99.1 | Press Release issued by Paylocity Holding Corporation dated November 5, 2026. | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PAYLOCITY HOLDING CORPORATION | ||||||||
Date: November 5, 2026 | By: | /s/ Ryan Glenn | ||||||
| Ryan Glenn | ||||||||
| Chief Financial Officer | ||||||||
Exhibit 99.1
press release
Paylocity Announces First Quarter Fiscal 2027 Financial Results
•Q1 Fiscal 2027 Recurring & Other Revenue of $424.5 million, up 12.0% year-over-year
•Q1 Fiscal 2027 Total Revenue of $451.7 million, up 10.7% year-over-year
•Completed acquisition of Aidora Inc. in July 2026 to expand AI-powered leave management capabilities
•Repurchased $152.5 million or 1.1 million shares in Q1 Fiscal 2027; $850.2 million or 5.7 million shares repurchased since May 2024
SCHAUMBURG, IL. – November 5, 2026 – Paylocity Holding Corporation (Nasdaq: PCTY), a leading provider of cloud-based HCM, Finance, and IT solutions, today announced financial results for the first quarter of fiscal 2027, which ended September 30, 2026.
“Fiscal 27 is off to a strong start, with first quarter recurring & other revenue growth of 12.0% as we continue to see strong execution by our go-to-market teams, industry leading revenue retention, and product innovation that is bringing to market meaningful new AI-driven experiences and solutions that create differentiation and drive ARPU. Our strong first quarter results and the momentum we are seeing as we head into the heart of selling season are helping to drive a strong increase to our fiscal 27 guidance across both revenue and profitability. Our growth continues to be led by Ignite AI, as we focus on driving innovation and providing the most modern AI-driven platform, including our recently announced Recruiting Optimizer. We also continue to be very pleased with the early positive response to our Elevate Solutions and Paylocity for Retirement, with strong momentum across each of these offerings,” said Toby Williams, President and Chief Executive Officer of Paylocity.
First Quarter Fiscal 2027 Financial Highlights
Revenue:
•Recurring & other revenue was $424.5 million, an increase of 12.0% from the first quarter of fiscal 2026.
•Total revenue was $451.7 million, an increase of 10.7% from the first quarter of fiscal 2026.
Operating Income:
•GAAP operating income was $82.2 million and non-GAAP operating income was $133.9 million in the first quarter of fiscal 2027 compared to GAAP operating income of $74.2 million and non-GAAP operating income of $121.2 million in the first quarter of fiscal 2026.
Net Income:
•GAAP net income was $57.6 million or $1.07 per share in the first quarter of fiscal 2027 based on 53.7 million diluted weighted average common shares outstanding compared to $48.0 million or $0.86 per share in the first quarter of fiscal 2026 based on 55.9 million diluted weighted average common shares outstanding.
Adjusted EBITDA:
•Adjusted EBITDA, a non-GAAP measure, was $159.5 million in the first quarter of fiscal 2027 compared to $146.4 million in the first quarter of fiscal 2026.
•Adjusted EBITDA excluding interest income on funds held for clients, a non-GAAP measure, was $132.3 million in the first quarter of fiscal 2027 as compared to $117.1 million in the first quarter of fiscal 2026.
Balance Sheet and Cash Flow:
•Cash and cash equivalents totaled $194.5 million as of September 30, 2026.
•Long-term debt totaled $131.3 million as of September 30, 2026, representing borrowings under our credit facility.
•Net cash provided by operating activities for the first three months of fiscal 2027 was $79.7 million compared to $86.5 million for the first three months of fiscal 2026. Net cash from operating activities for the trailing twelve months ended September 30, 2026 was $526.5 million or 29.0% of total revenue as compared to $413.2 million or 25.2% of total revenue for the trailing twelve months ended September 30, 2025.
•Free cash flow, a non-GAAP measure, was $416.7 million or 23.0% of total revenue for the trailing twelve months ended September 30, 2026 compared to $336.0 million or 20.5% of total revenue for the trailing twelve months ended September 30, 2025.
A reconciliation of GAAP to non-GAAP financial measures has been provided in this press release in the accompanying tables. Additional information regarding these measures can be found below under the headings “Non-GAAP Financial Measures” and “Definitions of our Non-GAAP Measures.”
Business Outlook
Based on information available as of November 5, 2026, Paylocity is issuing guidance for the second quarter and full fiscal 2027 as indicated below.
Second Quarter Fiscal 2027:
•Recurring and other revenue is expected to be in the range of $423.0 million to $428.0 million, which represents approximately 10% growth over fiscal 2026 second quarter recurring and other revenue.
•Total revenue is expected to be in the range of $452.5 million to $457.5 million, which represents approximately 9% growth over fiscal 2026 second quarter total revenue.
•Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $152.5 million to $156.5 million.
•Adjusted EBITDA excluding interest income on funds held for clients, a non-GAAP measure, is expected to be in the range of $123.0 million to $127.0 million.
Full Fiscal 2027:
•Recurring and other revenue is expected to be in the range of $1.792 billion to $1.807 billion, which represents approximately 9% growth over fiscal 2026 recurring and other revenue.
•Total revenue is expected to be in the range of $1.910 billion to $1.925 billion, which represents approximately 8% growth over fiscal 2026 total revenue.
•Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $711.5 million to $721.5 million.
•Adjusted EBITDA excluding interest income on funds held for clients, a non-GAAP measure, is expected to be in the range of $593.5 million to $603.5 million.
We are unable to reconcile the forward-looking non-GAAP measures set forth above to their directly comparable GAAP financial measures because the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort.
Conference Call Details
Paylocity will host a conference call to discuss its first quarter fiscal 2027 results at 4:00 p.m. Central Time today (5:00 p.m. Eastern Time). A live audio webcast of the conference call along with detailed financial information can be accessed through https://investors.paylocity.com/events-and-presentations where dial in details are provided. A replay of the call will be available and archived via webcast at https://investors.paylocity.com/.
About Paylocity
Headquartered in Schaumburg, IL, Paylocity (NASDAQ: PCTY) is an award-winning provider of HCM, Finance, and IT software solutions. Paylocity offers one unified, easy-to-use platform that helps businesses across HR, Finance, and IT streamline operations, manage spend and talent, and build culture and connection—with AI embedded directly into everyday workflows to save time, reduce manual effort, and support better decisions. Known for its unique culture and consistently recognized as one of the best places to work, Paylocity accompanies its clients on the journey to create great workplaces and help all employees achieve their best. For more information, visit www.paylocity.com.
Non-GAAP Financial Measures
The company uses certain non-GAAP financial measures when reporting and discussing its financial results, including the financial measures in this release that are designated as being “non-GAAP.” Management presents certain non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance, as they provide investors with the company’s view of its financial performance. Management uses non-GAAP financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance, including comparisons of current results to prior periods’ results by excluding items the company does not believe reflect fundamental business performance and are not representative or indicative of its results of operations. Non-GAAP financial measures have limitations as an analytical tool and other companies may define their non-GAAP financial measures differently than we do. Investors are encouraged to review the reconciliation of the non-GAAP measures to their most directly comparable GAAP measures provided in the accompanying tables to this release, as well as the definitions of those non-GAAP measures following such tables.
Safe Harbor/Forward Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included herein regarding Paylocity’s future operations, future financial position and performance, anticipated results of operations, prospects, plans and objectives of management are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “seek” and similar expressions (or the negative of these terms) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include statements about management's estimates regarding future revenues and financial performance, and other statements about management’s beliefs, intentions or goals and are expressed in good faith and believed to be reasonable at the time such statements are made. Paylocity may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on such statements. These forward-looking statements involve risks and uncertainties, many of which are beyond Paylocity’s control, that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements. Factors that could cause actual results or events to differ materially from what is presented include, but are not limited to, the general economic conditions in regions in which Paylocity does business, changes in interest rates, business disruptions, reductions in employment and increases in business failures that have occurred or may occur in the future; Paylocity’s ability to leverage artificial intelligence and machine learning in its technology, which may be constrained by current and future laws, regulations, interpretive positions or standards governing new and evolving technologies and ethical considerations that could restrict or impose burdensome and costly requirements on its ability to continue to leverage data in innovative ways; Paylocity’s ability to retain existing clients and to attract new clients to enter into subscriptions for its services; the challenges associated with a growing company’s ability to effectively service clients in a dynamic and competitive market; challenges associated with expanding and evolving a sales organization to effectively address new geographies and products and services; challenges related to cybersecurity threats and evolving cybersecurity regulations; Paylocity’s reliance on and ability to expand its referral network of third parties; difficulties associated with accurately forecasting revenue and appropriately planning expenses; challenges with managing growth effectively; risks related to acquisitions and investments in other businesses and technologies; risks related to regulatory, legislative and judicial uncertainty in Paylocity’s markets; Paylocity’s ability to protect and defend its intellectual property and its use of open source software in its products; the risk that Paylocity’s security measures are compromised or a threat actor gains unauthorized access to customer data; unexpected events in the market for Paylocity’s solutions; changes in the competitive environment in Paylocity’s industry and the markets in which it operates; adverse changes in general economic or market conditions; changes in the employment rates of Paylocity’s clients and the resultant impact on revenue; the possibility that Paylocity may be adversely affected by other economic, business, and/or competitive factors; and other risks and potential factors that could affect Paylocity’s business and financial results that are identified in Paylocity’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on
August 5, 2026, as well as any revisions or supplements to the information in subsequent reports filed or furnished to the SEC. These forward-looking statements represent Paylocity’s expectations as of the date of this press release. Subsequent events may cause these expectations to change, and unless legally required, Paylocity disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.
PAYLOCITY HOLDING CORPORATION
Unaudited Consolidated Balance Sheets
(in thousands, except per share data)
| June 30, 2026 | September 30, 2026 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 271,917 | $ | 194,523 | |||||||
| Accounts receivable, net | 50,093 | 56,945 | |||||||||
| Prepaid expenses and other | 57,582 | 72,721 | |||||||||
| Total current assets before funds held for clients | 379,592 | 324,189 | |||||||||
| Funds held for clients | 3,210,504 | 2,888,615 | |||||||||
| Total current assets | 3,590,096 | 3,212,804 | |||||||||
| Capitalized internal-use software, net | 143,594 | 149,942 | |||||||||
| Property and equipment, net | 71,403 | 70,326 | |||||||||
| Operating lease right-of-use assets | 33,137 | 34,772 | |||||||||
| Intangible assets, net | 86,140 | 83,425 | |||||||||
| Goodwill | 378,964 | 386,507 | |||||||||
| Deferred contract costs | 559,186 | 578,697 | |||||||||
| Long‑term prepaid expenses and other | 10,363 | 17,292 | |||||||||
| Deferred income tax assets | 11,475 | 11,870 | |||||||||
| Total assets | $ | 4,884,358 | $ | 4,545,635 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 10,944 | $ | 8,713 | |||||||
| Accrued expenses | 200,279 | 187,467 | |||||||||
| Total current liabilities before client fund obligations | 211,223 | 196,180 | |||||||||
| Client fund obligations | 3,209,015 | 2,899,337 | |||||||||
| Total current liabilities | 3,420,238 | 3,095,517 | |||||||||
| Long-term debt | 81,250 | 131,250 | |||||||||
| Long-term operating lease liabilities | 42,200 | 45,724 | |||||||||
| Other long-term liabilities | 12,930 | 17,466 | |||||||||
| Deferred income tax liabilities | 106,323 | 106,094 | |||||||||
| Total liabilities | $ | 3,662,941 | $ | 3,396,051 | |||||||
| Stockholders’ equity: | |||||||||||
| Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2026 and September 30, 2026 | $ | — | $ | — | |||||||
| Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2026 and September 30, 2026; 53,271 shares issued and outstanding at June 30, 2026 and 52,307 shares issued and outstanding at September 30, 2026 | 53 | 52 | |||||||||
| Additional paid-in capital | 52,271 | — | |||||||||
| Retained earnings | 1,170,324 | 1,160,234 | |||||||||
| Accumulated other comprehensive loss | (1,231) | (10,702) | |||||||||
| Total stockholders' equity | $ | 1,221,417 | $ | 1,149,584 | |||||||
| Total liabilities and stockholders’ equity | $ | 4,884,358 | $ | 4,545,635 | |||||||
PAYLOCITY HOLDING CORPORATION
Unaudited Consolidated Statements of Operations and Comprehensive Income
(in thousands, except per share data)
| Three Months Ended September 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Revenues: | |||||||||||
| Recurring and other revenue | $ | 378,858 | $ | 424,470 | |||||||
| Interest income on funds held for clients | 29,314 | 27,199 | |||||||||
| Total revenues | 408,172 | 451,669 | |||||||||
| Cost of revenues | 128,380 | 147,568 | |||||||||
| Gross profit | 279,792 | 304,101 | |||||||||
| Operating expenses: | |||||||||||
| Sales and marketing | 96,368 | 101,132 | |||||||||
| Research and development | 55,607 | 59,036 | |||||||||
| General and administrative | 53,606 | 61,727 | |||||||||
| Total operating expenses | 205,581 | 221,895 | |||||||||
| Operating income | 74,211 | 82,206 | |||||||||
| Other income | 702 | 378 | |||||||||
| Income before income taxes | 74,913 | 82,584 | |||||||||
| Income tax expense | 26,922 | 24,942 | |||||||||
| Net income | $ | 47,991 | $ | 57,642 | |||||||
| Other comprehensive income (loss), net of tax | 679 | (9,471) | |||||||||
| Comprehensive income | $ | 48,670 | $ | 48,171 | |||||||
| Net income per share: | |||||||||||
| Basic | $ | 0.87 | $ | 1.09 | |||||||
| Diluted | $ | 0.86 | $ | 1.07 | |||||||
| Weighted-average shares used in computing net income per share: | |||||||||||
| Basic | 55,013 | 53,027 | |||||||||
| Diluted | 55,859 | 53,721 | |||||||||
Stock-based compensation expense and employer payroll taxes related to stock releases for each of the three months ended September 30 are included in the above line items:
| Three Months Ended September 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Cost of revenues | $ | 4,547 | $ | 5,203 | |||||||
| Sales and marketing | 9,196 | 9,407 | |||||||||
| Research and development | 9,887 | 9,728 | |||||||||
| General and administrative | 16,294 | 20,333 | |||||||||
| Total stock-based compensation expense and employer payroll taxes related to stock releases | $ | 39,924 | $ | 44,671 | |||||||
PAYLOCITY HOLDING CORPORATION
Unaudited Consolidated Statements of Cash Flows
(in thousands)
| Three Months Ended September 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 47,991 | $ | 57,642 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Stock-based compensation expense | 37,846 | 43,254 | |||||||||
| Depreciation and amortization expense | 27,453 | 29,904 | |||||||||
| Deferred income tax expense | 22,101 | 2,655 | |||||||||
| Provision for credit losses | 332 | 401 | |||||||||
| Net accretion of discounts on available-for-sale securities | (405) | (339) | |||||||||
| Other | 355 | 372 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (73) | (4,840) | |||||||||
| Deferred contract costs | (10,424) | (19,238) | |||||||||
| Prepaid expenses and other | (9,833) | (16,197) | |||||||||
| Accounts payable | (10,530) | (2,498) | |||||||||
| Accrued expenses and other | (18,357) | (11,426) | |||||||||
| Net cash provided by operating activities | 86,456 | 79,690 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of available-for-sale securities | (30,456) | — | |||||||||
| Proceeds from sales and maturities of available-for-sale securities | 32,358 | 5,919 | |||||||||
| Capitalized internal-use software costs | (15,460) | (20,450) | |||||||||
| Purchases of property and equipment | (3,797) | (3,105) | |||||||||
| Acquisitions of businesses, net of cash acquired | — | (10,623) | |||||||||
| Other investing activities | (338) | (2,325) | |||||||||
| Net cash used in investing activities | (17,693) | (30,584) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Net change in client fund obligations | 70,293 | (309,678) | |||||||||
| Borrowings under credit facility | — | 50,000 | |||||||||
| Repayment of credit facility | (81,250) | — | |||||||||
| Repurchases of common shares | (200,000) | (152,495) | |||||||||
| Taxes paid related to net share settlement of equity awards | (18,723) | (13,612) | |||||||||
| Other financing activities | (12) | (4,412) | |||||||||
| Net cash used in financing activities | (229,692) | (430,197) | |||||||||
| Net change in cash, cash equivalents and funds held for clients' cash and cash equivalents | (160,929) | (381,091) | |||||||||
| Cash, cash equivalents and funds held for clients' cash and cash equivalents—beginning of period | 2,482,526 | 2,869,966 | |||||||||
| Cash, cash equivalents and funds held for clients' cash and cash equivalents—end of period | $ | 2,321,597 | $ | 2,488,875 | |||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities | |||||||||||
| Purchases of property and equipment and capitalized internal-use software, accrued but not paid | $ | 278 | $ | 701 | |||||||
| Liabilities assumed for acquisitions | $ | — | $ | 290 | |||||||
| Supplemental Disclosure of Cash Flow Information | |||||||||||
| Cash paid for interest | $ | 2,325 | $ | 1,085 | |||||||
| Reconciliation of cash, cash equivalents and funds held for clients' cash and cash equivalents to the Consolidated Balance Sheets | |||||||||||
| Cash and cash equivalents | $ | 165,192 | $ | 194,523 | |||||||
| Funds held for clients' cash and cash equivalents | 2,156,405 | 2,294,352 | |||||||||
| Total cash, cash equivalents and funds held for clients' cash and cash equivalents | $ | 2,321,597 | $ | 2,488,875 | |||||||
Paylocity Holding Corporation
Reconciliation of GAAP to non-GAAP Financial Measures
(In thousands except per share data)
| Three Months Ended September 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Reconciliation from Gross profit to Adjusted gross profit: | |||||||||||
| Gross profit | $ | 279,792 | $ | 304,101 | |||||||
| Amortization of capitalized internal-use software costs | 17,250 | 18,570 | |||||||||
| Amortization of certain acquired intangibles | 4,601 | 5,170 | |||||||||
| Stock-based compensation expense and employer payroll taxes related to stock releases | 4,547 | 5,203 | |||||||||
| Other items (1) | 475 | 155 | |||||||||
| Adjusted gross profit | $ | 306,665 | $ | 333,199 | |||||||
| Three Months Ended September 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Reconciliation from Operating income to Non-GAAP Operating income: | |||||||||||
| Operating income | $ | 74,211 | $ | 82,206 | |||||||
| Stock-based compensation expense and employer payroll taxes related to stock releases | 39,924 | 44,671 | |||||||||
| Amortization of acquired intangibles | 5,261 | 5,915 | |||||||||
| Other items (1) | 1,764 | 1,101 | |||||||||
| Non-GAAP Operating income | $ | 121,160 | $ | 133,893 | |||||||
| Three Months Ended September 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Reconciliation from Net income to Non-GAAP Net income: | |||||||||||
| Net income | $ | 47,991 | $ | 57,642 | |||||||
| Stock-based compensation expense and employer payroll taxes related to stock releases | 39,924 | 44,671 | |||||||||
| Amortization of acquired intangibles | 5,261 | 5,915 | |||||||||
| Other items (1) | 1,764 | 1,101 | |||||||||
| Income tax effect on adjustments (2) | 2,720 | 2,847 | |||||||||
| Non-GAAP Net income | $ | 97,660 | $ | 112,176 | |||||||
| Three Months Ended September 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Calculation of Non-GAAP Net income per share: | |||||||||||
| Non-GAAP Net income | $ | 97,660 | $ | 112,176 | |||||||
| Diluted weighted-average number of common shares | 55,859 | 53,721 | |||||||||
| Non-GAAP Net income per share | $ | 1.75 | $ | 2.09 | |||||||
| Three Months Ended September 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Reconciliation from Net income to Adjusted EBITDA and Adjusted EBITDA excluding interest income on funds held for clients | |||||||||||
| Net income | $ | 47,991 | $ | 57,642 | |||||||
| Interest expense | 2,355 | 1,242 | |||||||||
| Income tax expense | 26,922 | 24,942 | |||||||||
| Depreciation and amortization expense | 27,453 | 29,904 | |||||||||
| EBITDA | 104,721 | 113,730 | |||||||||
| Stock-based compensation expense and employer payroll taxes related to stock releases | 39,924 | 44,671 | |||||||||
| Other items (1) | 1,764 | 1,101 | |||||||||
| Adjusted EBITDA | $ | 146,409 | $ | 159,502 | |||||||
| Interest income on funds held for clients | (29,314) | (27,199) | |||||||||
| Adjusted EBITDA excluding interest income on funds held for clients | $ | 117,095 | $ | 132,303 | |||||||
| Three Months Ended September 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Reconciliation of Non-GAAP sales and marketing: | |||||||||||
| Sales and marketing | $ | 96,368 | $ | 101,132 | |||||||
| Less: Stock-based compensation expense and employer payroll taxes related to stock releases | 9,196 | 9,407 | |||||||||
| Less: Other items (1) | 116 | 38 | |||||||||
| Non-GAAP sales and marketing | $ | 87,056 | $ | 91,687 | |||||||
| Three Months Ended September 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Reconciliation of Non-GAAP total research and development: | |||||||||||
| Research and development | $ | 55,607 | $ | 59,036 | |||||||
| Add: Capitalized internal-use software costs | 15,460 | 20,450 | |||||||||
| Less: Stock-based compensation expense and employer payroll taxes related to stock releases | 9,887 | 9,728 | |||||||||
| Less: Other items (1) | 586 | 335 | |||||||||
| Non-GAAP total research and development | $ | 60,594 | $ | 69,423 | |||||||
| Three Months Ended September 30, | |||||||||||
| 2025 | 2026 | ||||||||||
| Reconciliation of Non-GAAP general and administrative: | |||||||||||
| General and administrative | $ | 53,606 | $ | 61,727 | |||||||
| Less: Stock-based compensation expense and employer payroll taxes related to stock releases | 16,294 | 20,333 | |||||||||
| Less: Amortization of certain acquired intangibles | 660 | 745 | |||||||||
| Less: Other items (1) | 587 | 573 | |||||||||
| Non-GAAP general and administrative | $ | 36,065 | $ | 40,076 | |||||||
| Three Months Ended September 30, | Trailing Twelve Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2026 | 2025 | 2026 | ||||||||||||||||||||
| Reconciliation of Free cash flow, Free cash flow excluding interest income on funds held for clients and Adjusted free cash flow excluding interest income on funds held for clients: | |||||||||||||||||||||||
| Net cash provided by operating activities | $ | 86,456 | $ | 79,690 | $ | 413,227 | $ | 526,486 | |||||||||||||||
| Capitalized internal-use software costs | (15,460) | (20,450) | (62,652) | (74,292) | |||||||||||||||||||
| Purchases of property and equipment | (3,797) | (3,105) | (14,542) | (35,460) | |||||||||||||||||||
| Free cash flow | $ | 67,199 | $ | 56,135 | $ | 336,033 | $ | 416,734 | |||||||||||||||
| Less: Interest income on funds held for clients | (29,314) | (27,199) | (122,883) | (117,849) | |||||||||||||||||||
| Free cash flow excluding interest income on funds held for clients | $ | 37,885 | $ | 28,936 | $ | 213,150 | $ | 298,885 | |||||||||||||||
| Cash paid for other items (3) | 1,381 | 1,208 | |||||||||||||||||||||
| Adjusted free cash flow excluding interest income on funds held for clients | $ | 39,266 | $ | 30,144 | |||||||||||||||||||
(2) Includes the income tax effect on non-GAAP net income adjustments related to stock-based compensation expense and employer payroll taxes related to stock releases, amortization of acquired intangibles and other items, which include acquisition and transaction-related costs and severance costs related to certain roles that have been eliminated. We exclude one-off severance costs that we incur as part of the normal course of our business operations.
(3) Represents cash paid for acquisition and transaction-related costs and severance costs related to certain roles that have been eliminated.
Definitions of our Non-GAAP Measures
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA Excluding Interest Income on Funds Held for Clients, and Adjusted EBITDA Excluding Interest Income on Funds Held for Clients Margin
Adjusted EBITDA is calculated as net income before interest expense, income tax expense, and depreciation and amortization expense, adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and other items as described above in this release. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenues.
Adjusted EBITDA excluding interest income on funds held for clients is calculated in the same manner as Adjusted EBITDA and is further adjusted to eliminate interest income on funds held for clients. Adjusted EBITDA excluding interest income on funds held for clients margin is Adjusted EBITDA excluding interest income on funds held for clients divided by recurring and other revenue.
Adjusted Gross Profit and Adjusted Gross Profit Margin
Adjusted gross profit is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases, the amortization of capitalized internal-use software costs and certain acquired intangibles and other items as described above in this release.
Adjusted gross profit margin is calculated as adjusted gross profit as described in the preceding sentence divided by total revenues.
Non-GAAP Operating Income, Non-GAAP Net Income, and Non-GAAP Income Per Share
Non-GAAP operating income is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases, the amortization of acquired intangibles and other items as described above in this release.
Non-GAAP net income and non-GAAP net income per share are adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases, the amortization of acquired intangibles and other items as described above in this release, including the income tax effect on these items.
Non-GAAP Sales and Marketing Expense, Non-GAAP Sales and Marketing Expense Margin, Non-GAAP Total Research and Development, Non-GAAP Total Research and Development Margin, Non-GAAP General and Administrative Expense, and Non-GAAP General and Administrative Expense Margin
Non-GAAP sales and marketing expense is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and other items as described above in this release. Non-GAAP sales and marketing margin is calculated by dividing non-GAAP sales and marketing by total revenues.
Non-GAAP total research and development is adjusted for capitalized internal-use software costs paid and to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and other items as described above in this release. Non-GAAP total research and development margin is calculated by dividing non-GAAP total research and development by total revenues.
Non-GAAP general and administrative expense is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases, the amortization of certain acquired intangibles and other items as described above in this release. Non-GAAP general and administrative margin is calculated by dividing non-GAAP general and administrative expense by total revenues.
Free Cash Flow, Free Cash Flow Margin, Free Cash Flow Excluding Interest on Funds Held for Clients, Free Cash Flow Excluding Interest on Funds Held for Clients Margin, Adjusted Free Cash Flow Excluding Interest Income on Funds Held for Clients and Adjusted Free Cash Flow Excluding Interest Income on Funds Held for Clients Margin
Free cash flow is defined as net cash provided by operating activities less capitalized internal-use software costs and purchases of property and equipment. Free cash flow margin is calculated by dividing free cash flow by total revenues.
Free cash flow excluding interest income on funds held for clients is defined in the same manner as free cash flow but also excludes interest income on funds held for clients. Free cash flow margin excluding interest income on funds held for clients is calculated by dividing free cash flow excluding interest income on funds held for clients by recurring and other revenue.
Adjusted free cash flow excluding interest income on funds held for clients is defined in the same manner as free cash flow excluding interest income on funds held for clients plus cash paid for other items as described above in this release. Adjusted free cash flow margin excluding interest income on funds held for clients is calculated by dividing adjusted free cash flow excluding interest income on funds held for clients by recurring and other revenue.