SCHAUMBURG, Ill., Sept. 02, 2025 (GLOBE NEWSWIRE) -- Two Chicago standouts are joining forces. Paylocity, a leading provider of cloud-based HR, Finance and IT solutions, is partnering with the Chicago Bulls in a multi-year sponsorship, tipping off a dynamic collaboration rooted in performance, innovation and a shared commitment to their hometown. As the Official HCM Software Partner of the Chicago Bulls, Paylocity will power the team’s HR and payroll operations with its comprehensive suite of solutions, ena ...

Core Insights - Paylocity Holding Corporation (PCTY) reported fourth-quarter fiscal 2025 non-GAAP earnings of $1.56 per share, exceeding the Zacks Consensus Estimate by 13.04% and reflecting a year-over-year increase of 5.4% [1][8] - The company's revenues rose 12% year over year to $400.7 million, surpassing the Zacks Consensus Estimate by 3.10% [1][8] Revenue Breakdown - The top-line growth was driven by a 13.9% increase in Recurring and other revenues, which accounted for 92.3% of total revenues, reaching $369.9 million [2] - Interest income on funds held for clients, representing 7.7% of total revenues, declined 5.2% year over year to $30.9 million [2] Quarterly Financial Performance - Paylocity's adjusted gross profit was $296.7 million, up 14.2% from the previous year, with an adjusted gross margin expansion of 130 basis points to 74.1% [3] - Non-GAAP operating income increased 9.7% year over year to $105.6 million, while the non-GAAP operating margin contracted 60 basis points to 26.4% [3] - Adjusted EBITDA rose 8.8% from the year-ago quarter to $130.7 million, with an adjusted EBITDA margin down 100 basis points to 32.6% [3][8] Balance Sheet and Cash Flow - As of June 30, 2025, Paylocity's cash and cash equivalents were $398.1 million, down from $477.8 million as of March 31, 2025 [4] - Long-term debt totaled $162.5 million due to borrowings for the acquisition of Airbase, with approximately $162.5 million repaid during the second half of fiscal year 2025 [4] - Cash flow from operations for fiscal year 2025 was $418.2 million, compared to $331.7 million for the first nine months of the fiscal year [5] - Non-GAAP free cash flow was $342.8 million as of June 30, 2025, up from $278.5 million as of March 31, 2025 [5] Guidance - For the first quarter of fiscal 2026, Paylocity expects total revenues of $397.5-$402.5 million, indicating a 10% growth from the previous year [6] - For fiscal 2026, total revenues are projected between $1.707 billion and $1.722 billion, implying an 8% growth from the prior year [6]

```markdown PART I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) Paylocity is a leading cloud-based provider of human capital management (HCM), payroll, and spend management software solutions, serving approximately **41,650 clients** across the U.S. as of June 30, 2025 - **Paylocity** is a leading cloud-based provider of **HCM**, **payroll**, and **spend management software solutions**, serving approximately **41,650 clients** across the U.S. as of June 30, 2025[19](index=19&type=chunk)[195](index=195&type=chunk)[62](index=62&type=chunk) - The company's **strategy** includes extending technological leadership, growing its **client base** (target **market** of **1.3 million businesses** with **10-5,000 employees**), expanding **product offerings**, and developing its **referral network**[25](index=25&type=chunk)[25](index=25&type=chunk)[25](index=25&type=chunk) **Key Financial Highlights** | Metric | FY2023 | FY2024 | FY2025 | | :-------------------------------- | :------- | :------- | :------- | | **Total Revenues** (Millions) | **$1,174.6** | **$1,402.5** | **$1,595.2** | | **YoY Increase** | - | **19%** | **14%** | | **Annual Revenue Retention Rate** | **>92%** | **>92%** | **>92%** | | **Client Count** (as of June 30) | **36,200** | **39,050** | **41,650** | [Overview](index=4&type=section&id=Overview) **Paylocity** provides cloud-based **HCM**, **payroll**, and **spend management software solutions** to approximately **41,650 clients** across the U.S. as of June 30, 2025, with an average of over **150 employees**[19](index=19&type=chunk)[62](index=62&type=chunk) - The platform offers a comprehensive suite of **products** designed to streamline HR, **payroll**, and **spend management**, attract and retain talent, and build culture and connection[19](index=19&type=chunk)[26](index=26&type=chunk) - Key benefits include a single platform with flexible data, enhanced **employee experience**, AI-powered insights and recommendations, leading **customer service**, and seamless integration with hundreds of third-party partner systems[23](index=23&type=chunk) [Our Strategy](index=6&type=section&id=Our%20Strategy) **Paylocity** aims to strengthen its position as a leading provider of cloud-based **HCM**, **payroll**, and **spend management solutions**[25](index=25&type=chunk) - Extend Technological Leadership: Continue innovation in cloud-based software, unified database architecture, mobile applications, social features, and analytics, leveraging an intuitive user interface[25](index=25&type=chunk) - Grow Our **Client Base**: Expand beyond the current **41,650 clients** to address a **market** of approximately **1.3 million** U.S. **businesses** with **10-5,000 employees**, with a realized target addressable **market** of **$22.0 billion**[25](index=25&type=chunk) - Expand Our **Product Offerings**: Invest in **product development** to offer a broader selection of **solutions** to new and existing **clients**[25](index=25&type=chunk) - Further Develop Our **Referral Network**: Increase integration with third-party providers and expand the **network** of **401(k) advisors**, **benefits administrators**, insurance brokers, and HR consultants to grow the **client base** and lower acquisition **costs**[25](index=25&type=chunk) [Our Products](index=7&type=section&id=Our%20Products) **Paylocity** offers a unified platform with a comprehensive suite of **HCM**, **payroll**, and **spend management solutions**[26](index=26&type=chunk) - **Payroll**: Includes **Payroll** and **Tax Services**, **Global Payroll** (**100+ countries**), **On Demand Payment**, and **Garnishments**[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - Human Resources: Features Human Resources **management**, **Employee Self-Service** (with AI Assistant), **Workflows & Documents**, **HR Compliance Dashboard**, and **HR Edge**[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - Time & Labor: Provides **Time** and **Attendance tracking**, AI-driven **Scheduling**, and various **Time Collection devices**[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - Talent: Offers **Recruiting tools** (auto-posting, QR code applications, bias reduction), **Onboarding**, **Market Pay insights**, **Learning** (custom and library courses), **Performance management**, and **Compensation tools**[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - Benefits: Includes **Benefit Enrollment & Updates** (AI-powered decision support) and **Third-Party Administrative (TPA) Solutions** (HSA, FSA, HRA, TMA, POP, COBRA)[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - **Employee Experiences**: Features **Community** (streamlined communication, chat, file sharing), **Video tools**, **Employee Voice** (AI-generated sentiment summaries), **Recognition & Rewards**, **Modern Workforce Index** (AI-powered HR intelligence), and **Data Insights & Reporting**[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - **Paylocity for Finance**: Includes **Headcount Planning**, AI-powered **Expense Management**, AI-powered **Accounts Payable Automation**, **Corporate Cards**, and **Guided Procurement**[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) [Client Support Teams](index=11&type=section&id=Client%20Support%20Teams) **Paylocity** supplements its **software platform** with an integrated implementation and **client service organization**, emphasizing a positive **client experience** and high **support levels**[57](index=57&type=chunk)[60](index=60&type=chunk) - Implementation and Training Services: Rapid implementation (**1-8 weeks**) guided by consultants, supported by standardized methodology, cloud-based architecture, and configurable **products**. Offers on-demand/in-class training and an annual **client conference**[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) - **Client Service**: Achieves high **revenue retention** (over **92%** in FY2023-2025) through assigned **account management teams**, deep technical expertise, proactive **client feedback surveys**, and an online knowledge repository[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) - **Tax and Regulatory Services**: Utilizes a rules engine for accurate federal, state, and local **tax calculations**, continually updated by **tax compliance professionals**. Provides **payroll tax deposits**, **return filing**, and **notice resolution**[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) [Clients](index=12&type=section&id=Clients) As of June 30, 2025, **Paylocity** served approximately **41,650 clients** across various industries in the U.S., excluding acquired **clients**[62](index=62&type=chunk) - **Client acquisition** is variable and seasonal, with many **clients** switching **solutions** in the first calendar quarter. No single **client** accounted for more than **1%** of **revenues** in fiscal **years 2023**, **2024**, or **2025**[62](index=62&type=chunk) [Sales and Marketing](index=12&type=section&id=Sales%20and%20Marketing) **Paylocity markets** and sells **products** through a direct **sales force** with defined geographic territories in the U.S[63](index=63&type=chunk) - **Sales leads** are generated through **sales representatives**, a third-party **referral network**, **client referrals**, telemarketing, the external website, and **marketing initiatives** (seminars, webinars, email, social media, broker events)[64](index=64&type=chunk) [Referral Network](index=12&type=section&id=Referral%20Network) A strong **referral network**, including **401(k) advisors**, **benefits administrators**, and HR consultants, is a significant component of the **sales process**[65](index=65&type=chunk) - In fiscal **2025**, over **25%** of new **client revenue** originated from **referrals**. Partners are attracted by **product strength**, **value** from the broker portal, non-competitive **services**, and **platform integration capabilities**[65](index=65&type=chunk)[66](index=66&type=chunk) [Marketplace](index=12&type=section&id=Marketplace) **Paylocity** has a partner ecosystem with automated **data integration** for third-party systems (e.g., **401(k)**, **benefits**, **insurance providers**)[67](index=67&type=chunk) - This **integration** reduces complexity, errors, and saves **time** for **clients** and **employees**, while enhancing partners' **service offerings** and **competitive positioning**[68](index=68&type=chunk) [Technology](index=13&type=section&id=Technology) **Paylocity's solutions** are offered on a cloud-based platform with a unified architecture and common code base, accessible via mobile devices or web browsers[69](index=69&type=chunk) - The company uses multiple cloud hosting and third-party **data center providers**, including locations in Franklin Park, Illinois, and Kenosha, Wisconsin (for backup and **disaster recovery**)[70](index=70&type=chunk) [Competition](index=13&type=section&id=Competition) The **HCM** and **payroll solutions market** is fragmented, highly competitive, and rapidly changing, with competitors including Automatic Data Processing, Inc., Dayforce, Inc., Paychex, Inc., Paycom Software, Inc., and Ultimate Kronos Group[71](index=71&type=chunk)[102](index=102&type=chunk) - Key competitive factors include multi-tenant architecture, mobile-focused design, robust **security programs**, comprehensive **product suite** on a single platform, configurability, ease of use, modern **user experience**, **innovation capability**, **domain expertise**, **quality of service**, ease of implementation, real-time **payroll processing**, and access to third-party providers[72](index=72&type=chunk)[73](index=73&type=chunk) [Research and Development](index=14&type=section&id=Research%20and%20Development) **Paylocity** invests heavily in **R&D** to continuously introduce new modules, technologies, features, and functionality, utilizing agile **development methodology**[75](index=75&type=chunk) **R&D Costs (Millions)** | Fiscal Year | **R&D Costs** (Millions) | | :---------- | :------------------- | | **2023** | **$219.6** | | **2024** | **$253.9** | | **2025** | **$281.7** | [Intellectual Property](index=14&type=section&id=Intellectual%20Property) **Success** depends on protecting proprietary **technology** and **intellectual property rights** through **trade secrets**, **copyrights**, **trademarks**, and **contractual protections**[77](index=77&type=chunk) - Key means of maintaining **technology leadership** include the technological and creative **skills** of **personnel**, creation of new modules, features, and frequent enhancements[77](index=77&type=chunk) [Governmental Regulation](index=14&type=section&id=Governmental%20Regulation) **Paylocity's platform** handles sensitive **data** and is subject to evolving **data privacy laws** (e.g., HIPAA, CCPA, BIPA, GDPR) and **regulatory requirements** related to **tax**, **benefits**, and other **laws**[78](index=78&type=chunk)[79](index=79&type=chunk) - **Compliance** requires continuous modification of **products** and **services**, potentially incurring additional **costs** or hindering new **product development**[79](index=79&type=chunk) - The company has implemented established frameworks, policies, and procedures to protect **data accuracy**, **privacy**, and **security**, and undergoes periodic **audits** and **certifications**[80](index=80&type=chunk)[81](index=81&type=chunk) [Human Capital](index=15&type=section&id=Human%20Capital) As of June 30, 2025, **Paylocity** had approximately **6,700 full-time employees**, primarily in the United States[84](index=84&type=chunk) - **Culture & Engagement**: Driven by core **values** (earning it every day, **growth fuels opportunity**, thinking next generation, living the **reputation**, unbeatable together), fostering an engaging **culture**. Recognized by Forbes, Newsweek, Fortune, Time, and Built In. Supports **Employee Resource Groups (ERGs)**[83](index=83&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - **Learning & Development**: Committed to industry-leading **talent development** and **leadership programs**, offering **professional development courses**, internal **learning tools**, and specialized **training programs** (e.g., operations, sales, leadership)[83](index=83&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - **Talent Acquisition & Compensation**: Focuses on attracting top talent regardless of location, emphasizing **values**, **curiosity**, and diverse perspectives. Offers competitive **total rewards**, including **pay**, **restricted stock**, **ESPP**, **retirement benefits**, **paid time off**, and **health/well-being resources**[83](index=83&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - **PCTY Gives**: Mobilizes **technology**, **people**, and **resources** for **community giving** through in-kind donations, the **Elevate Your Passions (EYP) Grant Program**, **paid volunteer time**, and partnerships with national organizations like **Girls Who Code** and **American Red Cross**. Also supports the **Peter J. McGrail Scholarship program**[83](index=83&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) [Available Information](index=16&type=section&id=Available%20Information) **Paylocity's investor relations website** (http://investors.paylocity.com) provides free access to **SEC filings** (**10-K**, **10-Q**, **8-K**) as soon as practicable after electronic filing[93](index=93&type=chunk) [Item 1A. Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various risks that could materially adversely affect **Paylocity's business**, **growth prospects**, **financial condition**, or **operating results**, spanning operational, technological, competitive, legal, regulatory, financial, and stock ownership aspects - Quarterly **operating results** may fluctuate due to factors like **client employee counts**, **renewal rates**, **market acceptance**, **client budgets**, **business disruptions**, macroeconomic factors (**interest rates**, **inflation**), and unforeseen **legal expenses**[95](index=95&type=chunk)[96](index=96&type=chunk)[100](index=100&type=chunk) - Failure to innovate and deliver technologically advanced **products**, especially with rapid advancements in AI and **machine learning**, could lead to **loss of competitiveness**, **revenue**, and **operating results**[97](index=97&type=chunk)[98](index=98&type=chunk) - **Cybersecurity attacks** and incidents pose significant **risks**, potentially leading to unauthorized **data access**, **service disruptions**, **client loss**, **reputational harm**, **litigation**, and **regulatory fines**, despite ongoing **security measures**[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - **Compliance** with evolving **data privacy laws** (HIPAA, GDPR, CCPA) and other **regulatory requirements** (**tax**, **benefits**, **employment**) could impose increased **costs**, delay new **product introductions**, or impair existing **services**[139](index=139&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) [Risks Related to our Business and Industry](index=16&type=section&id=Risks%20Related%20to%20our%20Business%20and%20Industry) Quarterly **operating results** are subject to fluctuations due to factors such as **client employee counts**, **renewal rates**, **market acceptance**, **client budgets**, **business disruptions**, macroeconomic conditions (**interest rates**, **inflation**), and **legal expenses**[95](index=95&type=chunk)[100](index=100&type=chunk) - The company faces intense **competition** from larger, more resourced **payroll** and HR **service/software providers**, requiring continuous **innovation** to maintain **competitiveness**[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) - Failure to effectively manage **growth**, including attracting and retaining skilled **personnel** and maintaining **technology infrastructure**, could increase **expenses** and hinder **revenue growth**[99](index=99&type=chunk)[101](index=101&type=chunk) - Operational **risks** include potential **service outages** from **infrastructure failures**, reliance on third-party **service providers** (e.g., couriers, banks for ACH transfers), and the **risk** of **client payment defaults**[105](index=105&type=chunk)[106](index=106&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) [Risks Related to Cybersecurity and Intellectual Property Rights](index=21&type=section&id=Risks%20Related%20to%20Cybersecurity%20and%20Intellectual%20Property%20Rights) **Breaches** or unauthorized access to **information systems**, **client data**, or **funds** could lead to **client loss**, **reputational harm**, **litigation**, **government enforcement**, and significant **liabilities**[123](index=123&type=chunk)[127](index=127&type=chunk)[129](index=129&type=chunk) - The company's reliance on **trade secrets**, **copyrights**, and **trademarks** for **intellectual property protection** may be inadequate against unauthorized use or copying, potentially requiring costly **litigation**[131](index=131&type=chunk)[133](index=133&type=chunk) - The use of **open-source software** in **products** may expose the company to additional **risks**, including potential **disclosure requirements** for proprietary code or **intellectual property infringement claims**[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) [Risks Related to Legal and Regulatory Matters](index=24&type=section&id=Risks%20Related%20to%20Legal%20and%20Regulatory%20Matters) Changes in **regulatory laws** (**tax**, **benefits**, **employment**, **privacy**) could increase **costs**, delay new **product introductions**, or negatively affect existing **services**, potentially requiring **registration** or **licensing** as a **money transmitter**[139](index=139&type=chunk) - Failure to comply with **data privacy laws** (HIPAA, GDPR, CCPA) could result in significant **penalties**, **legal liability**, **reputational damage**, and increased **governmental oversight**[143](index=143&type=chunk)[144](index=144&type=chunk)[146](index=146&type=chunk) - The use of new technologies like AI and **machine learning** introduces **legal risks** related to **intellectual property**, **privacy**, and **civil rights**, and may lead to increased **regulatory scrutiny**[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) [Risks Related to Financial Matters](index=26&type=section&id=Risks%20Related%20to%20Financial%20Matters) The **revolving credit agreement** contains restrictive **covenants**, and non-compliance could limit **borrowing ability** or make **outstanding amounts** immediately due, negatively impacting **financial condition**[150](index=150&type=chunk) - **Corporate investments** and **client funds** are subject to **market**, **interest rate**, **credit**, and **liquidity risks**, with potential for adverse impacts on **business** and **operating results** if **funds** are lost or inaccessible[151](index=151&type=chunk) - Changes in U.S. GAAP or interpretations by FASB and SEC could significantly affect reported **financial results**, including increased **volatility**[153](index=153&type=chunk) [Risks Related to Ownership of Our Common Stock](index=27&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) The **market price** of **common stock** may experience wide fluctuations due to **operating performance**, **acquisitions**, **management changes**, **research reports**, **public announcements**, **share repurchases**, and general **economic conditions**[154](index=154&type=chunk)[156](index=156&type=chunk) - The **share repurchase program** may increase **stock price volatility**, reduce **market liquidity**, and may not achieve anticipated long-term **stockholder value**[155](index=155&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - Future issuances of **common stock** could dilute existing **stockholders' ownership** and depress the **market price**. Anti-takeover provisions in charter documents and Delaware law could discourage changes in **control**[160](index=160&type=chunk)[161](index=161&type=chunk) [General Risk Factors](index=29&type=section&id=General%20Risk%20Factors) Adverse **economic** and **market conditions** (e.g., lower **employment**, rising **interest rates**, **inflation**) could reduce **demand** for **software solutions**, impacting **revenues**, **sales**, and increasing **price competition**[164](index=164&type=chunk) - Failure to maintain **effective internal controls** over **financial reporting** could lead to **investor loss of confidence**, negative impact on **stock price**, and potential **investigations** by **regulatory authorities**[165](index=165&type=chunk) [Item 1B. Unresolved Staff Comments](index=29&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC regarding the registrant's filings - No unresolved staff comments were reported[166](index=166&type=chunk) [Item 1C. Cybersecurity](index=29&type=section&id=Item%201C.%20Cybersecurity) **Paylocity** maintains a comprehensive **cybersecurity risk management program**, integrated into its overall **risk management function**, to assess, identify, and manage material **cybersecurity threats** - **Paylocity's cybersecurity risk management program** includes **information security policies** aligned with NIST, COSO, and ISO 27001, and maintains ISO 27001:2022 **certification** and SOC 1/SOC 2 **audits**[167](index=167&type=chunk)[168](index=168&type=chunk) - **Security Measures**: Multi-layered **vulnerability management**, **intrusion prevention systems**, **web application firewalls**, **network firewalls**, SIEM, **user/entity behavior analytics**, **endpoint detection and response**, **data loss prevention**, regular **penetration testing**, and **encryption** of sensitive **client information**[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - **Incident Response**: Maintains an **incident response plan** for identification, notification, **response activities**, and escalation based on severity[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - **Business Resilience**: Applies **controls** from BCI, DRII, and ISO 22301 for threat-agnostic **plans** to ensure **continuity of client services** and critical **business operations**[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - The **audit committee** oversees **cybersecurity risks**, receiving quarterly updates from the CISO, who leads the dedicated **information security team** and the **Information Security Steering Committee**[177](index=177&type=chunk)[178](index=178&type=chunk) [Risk Management and Strategy](index=29&type=section&id=Risk%20Management%20and%20Strategy) The **cybersecurity risk management program** includes formal **information security policies**, ISO 27001:2022 **certification**, and annual SOC 1 and SOC 2 **audits**[167](index=167&type=chunk)[168](index=168&type=chunk) - **Employee security awareness** and **training** are mandatory, covering sensitive **information handling**, **data breach responses**, and **security responsibilities**[169](index=169&type=chunk) - **Data and Web Security Safeguards**: Multi-layered **vulnerability management**, **intrusion prevention systems**, **web application firewalls**, **network firewalls**, SIEM, **user and entity behavior analytics**, **endpoint detection and response**, **data loss prevention**, regular **penetration testing**, and **encryption** of sensitive **client information**[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) - **Incident Response Plan**: Framework for identifying, notifying, organizing, and escalating **cyber incidents**[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) - **Business Resilience**: Threat-agnostic **plans** and **strategies** to continue **client services** and critical **business operations** during disruptions, validated through regular exercises[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) - **Third-Party Risk Management**: Ongoing **monitoring** and **cybersecurity risk assessments** for **vendors**, **suppliers**, and **service providers** with access to sensitive **information**[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) [Governance](index=31&type=section&id=Governance) The **board of directors** delegates **cybersecurity risk oversight** to the **audit committee**, which meets quarterly with the CISO[177](index=177&type=chunk) - The CISO, with over **20 years** of **experience** and multiple **certifications**, leads the **cybersecurity risk management efforts** and the **Information Security Steering Committee (ISSC)**, which tracks **risks**, reviews **audits**, and identifies **mitigation controls**[178](index=178&type=chunk) [Item 2. Properties](index=31&type=section&id=Item%202.%20Properties) As of June 30, 2025, **Paylocity's corporate headquarters** is located in Schaumburg, Illinois, occupying approximately **272,000 square feet** under **leases** expiring in October 2032 - **Corporate headquarters** in Schaumburg, Illinois (**272,000 sq ft**, **lease** until Oct 2032)[179](index=179&type=chunk) - Major **operations centers** in Lake Mary, Florida (**70,000 sq ft**), Meridian, Idaho (**64,000 sq ft**), and Pittsford, New York (**20,000 sq ft**)[179](index=179&type=chunk) - Additional smaller leased facilities serve as **data centers**, **sales offices**, and **distribution centers** across the U.S[179](index=179&type=chunk) [Item 3. Legal Proceedings](index=31&type=section&id=Item%203.%20Legal%20Proceedings) **Paylocity** is involved in **legal proceedings** arising in the ordinary course of **business** - A **class action complaint** filed in November 2020 alleging Illinois Biometric Information Privacy Act violations was dismissed with prejudice in April 2025, and the plaintiff has appealed[452](index=452&type=chunk) - A second, overlapping **class action complaint** filed in September 2023 was settled in June 2025 without a **material financial impact**[453](index=453&type=chunk) - **Management** believes current **litigation** will not materially adversely affect the company's **financial position**, **results of operations**, or **liquidity**[454](index=454&type=chunk) [Item 4. Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to **Paylocity Holding Corporation** - Not applicable[182](index=182&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=32&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) **Paylocity's common stock** is listed on the NASDAQ Global Select Market under the symbol "PCTY" - **Paylocity's common stock** (PCTY) is listed on the NASDAQ Global Select Market[184](index=184&type=chunk) - As of July 30, 2025, there were **55,161,627 shares** of **common stock issued** and **outstanding**[5](index=5&type=chunk) - The company has not paid **dividends** and does not intend to in the foreseeable future, prioritizing **investment** in **growth**[159](index=159&type=chunk)[186](index=186&type=chunk) **Share Repurchase Program Activity (Fiscal 2025):** | Period | **Total Shares Purchased** | **Average Price Paid per Share** | | :----------------------------- | :--------------------- | :--------------------------- | | April 1, 2025 - April 30, 2025 | **314,564** | **$178.21** | | May 1, 2025 - May 31, 2025 | — | — | | June 1, 2025 - June 30, 2025 | — | — | | **Total (Q4 FY2025)** | **314,564** | **$178.21** | | **Total (FY2025)** | **0.8 million** | **$190.16** | - The board authorized an additional **$500 million** for the **share repurchase program** in July 2025[253](index=253&type=chunk)[459](index=459&type=chunk) [Market Information](index=32&type=section&id=Market%20Information) **Paylocity's common stock** is listed on the NASDAQ Global Select Market under the symbol "PCTY"[184](index=184&type=chunk) - As of July 30, 2025, the closing **price** was **$186.41 per share**, with **6 holders** of record and **55,161,627 shares issued** and **outstanding**[5](index=5&type=chunk)[185](index=185&type=chunk) [Dividend Policy](index=32&type=section&id=Dividend%20Policy) **Paylocity** has not declared or paid **dividends** on its **common stock** in the past three fiscal **years** and does not intend to do so for the foreseeable future[159](index=159&type=chunk)[186](index=186&type=chunk) - Future **earnings** will be invested to fund **growth** and other **corporate initiatives**[159](index=159&type=chunk)[186](index=186&type=chunk) [Performance Graph](index=32&type=section&id=Performance%20Graph) The report includes a graph comparing the **total cumulative stockholder return** of **Paylocity's common stock** against the S&P 500 Index and the S&P Software & Services Select Industry Index for the period June 30, 2020, to June 30, 2025[188](index=188&type=chunk) [Issuer Purchases of Equity Securities](index=33&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) **Share Repurchase Program Activity (Q4 FY2025):** | Period | **Total Number of Shares Purchased** | **Average Price Paid per Share** | | :----------------------------- | :----------------------------- | :--------------------------- | | April 1, 2025 - April 30, 2025 | **314,564** | **$178.21** | | May 1, 2025 - May 31, 2025 | — | — | | June 1, 2025 - June 30, 2025 | — | — | | **Total** | **314,564** | | - The board approved a **share repurchase program** in April 2024, authorizing up to **$500 million** of **common stock**. An additional **$500 million** was authorized in July 2025[192](index=192&type=chunk)[253](index=253&type=chunk)[439](index=439&type=chunk)[459](index=459&type=chunk) - In fiscal **2025**, **Paylocity repurchased 0.8 million shares** for approximately **$149.6 million** at an average **cost** of **$190.16 per share**[253](index=253&type=chunk)[439](index=439&type=chunk) [Item 6. [Reserved]](index=33&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - This item is reserved[193](index=193&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of **Paylocity's financial condition** and **results of operations** for fiscal **years 2024** and **2025**, highlighting its cloud-based **HCM**, **payroll**, and **spend management solutions** - **Paylocity** is a leading cloud-based provider of **HCM**, **payroll**, and **spend management software solutions**, expanding **spend management** through the **acquisition** of Airbase Inc. in October 2024[195](index=195&type=chunk) **Key Financial Highlights (FY2024 vs. FY2025):** | Metric | FY2024 (Millions) | FY2025 (Millions) | **YoY Change** (%) | | :-------------------------------- | :---------------- | :---------------- | :------------- | | **Total Revenues** | **$1,402.5** | **$1,595.2** | **14%** | | **Recurring and Other Revenue** | **$1,281.7** | **$1,471.8** | **15%** | | **Interest Income on Funds Held** | **$120.8** | **$123.4** | **2%** | | **Gross Profit** | **$960.8** | **$1,097.0** | **14%** | | **Operating Income** | **$260.1** | **$304.0** | **17%** | | **Net Income** | **$206.8** | **$227.1** | **10%** | | **Adjusted Gross Profit** | **$1,034.8** | **$1,193.8** | **15%** | | **Adjusted EBITDA** | **$505.6** | **$583.0** | **15%** | - **Client count** increased by **7%** to approximately **41,650** as of June 30, 2025, and the **annual revenue retention rate** remained above **92%**[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) - The company's **liquidity** is supported by **$398.1 million** in **cash and cash equivalents** as of June 30, 2025, and a **$550.0 million revolving credit facility**, with **$162.5 million outstanding** after repaying a portion of the Airbase **acquisition funding**[252](index=252&type=chunk) [Overview](index=34&type=section&id=Overview) **Paylocity** is a leading cloud-based provider of **HCM**, **payroll**, and **spend management software solutions**, which expanded its **spend management capabilities** through the **acquisition** of Airbase Inc. in October 2024[195](index=195&type=chunk) - The company plans to continue investing in **research and development**, **sales and marketing**, and **client service** to grow its **client base** and increase **revenue** by expanding **product offerings**[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) [Key Metrics](index=35&type=section&id=Key%20Metrics) **Total Revenues Growth:** | Fiscal Year | **Total Revenues** (Millions) | **YoY Increase** | | :---------- | :------------------------ | :----------- | | **2023** | **$1,174.6** | - | | **2024** | **$1,402.5** | **19%** | | **2025** | **$1,595.2** | **14%** | **Client Count Growth (Excluding Acquisitions):** | As of June 30, | **Client Count** | | :------------- | :----------- | | **2023** | **36,200** | | **2024** | **39,050** | | **2025** | **41,650** | *Compound Annual **Growth Rate (CAGR)** of approximately **7%** from **2023** to **2025*** - **Annual revenue retention rate** exceeded **92%** for fiscal **years 2023**, **2024**, and **2025**, indicating strong **client satisfaction**[205](index=205&type=chunk) **Adjusted Gross Profit Reconciliation (Thousands):** | Metric | FY2023 | FY2024 | FY2025 | | :---------------------------------------------------------------- | :------- | :------- | :------- | | **Gross profit** | **$807,559** | **$960,786** | **$1,096,998** | | **Amortization of capitalized internal-use software costs** | **31,440** | **45,246** | **59,948** | | **Amortization of certain acquired intangibles** | **7,414** | **7,907** | **16,168** | | **Stock-based compensation expense and employer payroll taxes** | **18,446** | **20,350** | **19,314** | | **Other items** | **19** | **469** | **1,365** | | **Adjusted Gross Profit** | **$864,878** | **$1,034,758** | **$1,193,793** | **Adjusted EBITDA Reconciliation (Thousands):** | Metric | FY2023 | FY2024 | FY2025 | | :---------------------------------------------------------------- | :------- | :------- | :------- | | **Net income** | **$140,822** | **$206,766** | **$227,127** | | **Interest expense** | **752** | **758** | **13,053** | | **Income tax expense** | **17,792** | **70,249** | **81,936** | | **Depreciation and amortization expense** | **60,866** | **76,426** | **99,636** | | **EBITDA** | **$220,232** | **$354,199** | **$421,752** | | **Stock-based compensation expense and employer payroll taxes** | **154,505** | **152,446** | **150,063** | | **Other items** | **446** | (**1,091**) | **11,182** | | **Adjusted EBITDA** | **$375,183** | **$505,554** | **$582,997** | [Basis of Presentation](index=37&type=section&id=Basis%20of%20Presentation) - **Revenues**: Primarily from recurring **subscriptions** to cloud-based **software solutions** (**91-93%** of **total revenues**), including **base fees**, **per-employee fees**, and **product-based fees**. **Implementation fees** are deferred and amortized over up to **24 months**. **Interest income** is earned on **funds held for clients**[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk][224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) - **Cost of Revenues**: Consists of **employee-related expenses** for **client support** and implementation, **payroll tax filing**, **distribution costs**, **computing costs**, **amortization of acquired intangibles**, and **bank fees**. **Capitalized internal-use software costs** are amortized over **7 years**[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk][224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) - **Operating Expenses**: Includes **Sales and Marketing** (**employee-related**, **commissions**, **marketing**), **Research and Development** (**employee-related**, new technologies, existing **solution refinement**), and **General and Administrative** (**finance**, **legal**, HR, **consulting**, **occupancy**)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk][224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) - **Other Income (Expense)**: Primarily **interest income** on **cash and cash equivalents**, net of **interest expense** from the **revolving credit facility**[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk][224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) **Consolidated Statements of Operations Data (Thousands):** | Metric | FY2023 | FY2024 | FY2025 | | :------------------------------------ | :------- | :------- | :------- | | **Recurring and other revenue** | **$1,098,036** | **$1,281,680** | **$1,471,801** | | **Interest income on funds held for clients** | **$76,562** | **$120,835** | **$123,420** | | **Total revenues** | **$1,174,598** | **$1,402,515** | **$1,595,221** | | **Cost of revenues** | **367,039** | **441,729** | **498,223** | | **Gross profit** | **$807,559** | **$960,786** | **$1,096,998** | | **Sales and marketing** | **296,716** | **334,954** | **374,216** | | **Research and development** | **163,994** | **178,333** | **205,851** | | **General and administrative** | **191,823** | **187,406** | **212,907** | | **Total operating expenses** | **$652,533** | **$700,693** | **$792,974** | | **Operating income** | **$155,026** | **$260,093** | **$304,024** | | **Other income** | **3,588** | **16,922** | **5,039** | | **Income before income taxes** | **158,614** | **277,015** | **309,063** | | **Income tax expense** | **17,792** | **70,249** | **81,936** | | **Net income** | **$140,822** | **$206,766** | **$227,127** | **Consolidated Statements of Operations Data (% of Total Revenue):** | Metric | FY2023 | FY2024 | FY2025 | | :------------------------------------ | :----- | :----- | :----- | | **Recurring and other revenue** | **93%** | **91%** | **92%** | | **Interest income on funds held for clients** | **7%** | **9%** | **8%** | | **Total revenues** | **100%** | **100%** | **100%** | | **Cost of revenues** | **31%** | **31%** | **31%** | | **Gross profit** | **69%** | **69%** | **69%** | | **Sales and marketing** | **25%** | **24%** | **24%** | | **Research and development** | **14%** | **13%** | **13%** | | **General and administrative** | **16%** | **13%** | **13%** | | **Total operating expenses** | **55%** | **50%** | **50%** | | **Operating income** | **14%** | **19%** | **19%** | | **Other income** | **0%** | **1%** | **0%** | | **Income before income taxes** | **14%** | **20%** | **19%** | | **Income tax expense** | **2%** | **5%** | **5%** | | **Net income** | **12%** | **15%** | **14%** | [Comparison of Fiscal Years Ended June 30, 2024 and 2025](index=40&type=section&id=Comparison%20of%20Fiscal%20Years%20Ended%20June%2030%2C%202024%20and%202025) **Revenue Comparison (Thousands):** | Revenue Type | FY2024 | FY2025 | **Change** ($) | **Change** (%) | | :-------------------------- | :------- | :------- | :--------- | :--------- | | **Recurring and other revenue** | **$1,281,680** | **$1,471,801** | **$190,121** | **15%** | | **Interest income on funds held** | **$120,835** | **$123,420** | **$2,585** | **2%** | - **Recurring and other revenue** increased by **15%** due to strong **sales performance** and continued high **annual revenue retention**. **Client count** increased by **7%** to **41,650**[234](index=234&type=chunk) - **Interest income on funds held for clients** increased slightly by **2%** due to higher average daily balances, mostly offset by lower **interest rates**[235](index=235&type=chunk) **Cost of Revenues Comparison (Thousands):** | Metric | FY2024 | FY2025 | **Change** ($) | **Change** (%) | | :--------------- | :------- | :------- | :--------- | :--------- | | **Cost of revenues** | **$441,729** | **$498,223** | **$56,494** | **13%** | | **Gross profit margin** | **69%** | **69%** | **0%** | **0%** | - **Cost of revenues** increased by **13%** primarily due to additional **employee-related costs** (**$22.1M**), increased **internal-use software amortization** (**$14.7M**), **processing/delivery costs** (**$12.6M**), and **acquired intangible asset amortization** (**$8.3M**)[236](index=236&type=chunk) **Operating Expenses Comparison (Thousands):** | Expense Type | FY2024 | FY2025 | **Change** ($) | **Change** (%) | | :------------------------ | :------- | :------- | :--------- | :--------- | | **Sales and marketing** | **$334,954** | **$374,216** | **$39,262** | **12%** | | **Research and development** | **$178,333** | **$205,851** | **$27,518** | **15%** | | **General and administrative** | **$187,406** | **$212,907** | **$25,501** | **14%** | - **Sales and marketing** increased by **12%** due to **$36.8 million** in additional **employee-related costs** for **sales team expansion**. **R&D** increased by **15%** due to **$25.7 million** in additional **development personnel**. **G&A** increased by **14%** due to **$14.3 million** in additional **employee-related costs** and a **$4.3 million gain** related to **lease exit activity** in FY2024[237](index=237&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) - **Other income** decreased by **$11.9 million**, primarily due to **$12.3 million** in additional **interest expense** from **revolving credit facility borrowings**[241](index=241&type=chunk) - **Effective tax rates** were **25.4%** (FY2024) and **26.5%** (FY2025), higher than the federal statutory **rate** of **21%** primarily due to state **income taxes**[242](index=242&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=42&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) - **Revenue Recognition**: Applies ASC 606, recognizing **revenue** when **control** of **goods/services** is transferred. **Recurring fees** are satisfied over **time**, typically monthly. **Implementation fees** are deferred and amortized over up to **24 months**[245](index=245&type=chunk)[246](index=246&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk) - **Capitalized Internal-Use Software Costs**: Capitalizes **development costs** when **projects** are probable of completion and intended use, amortizing them straight-line over **2-3 years** (or **10 years** for main **processing activities**)[245](index=245&type=chunk)[246](index=246&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk) - **Business Combinations**: Accounts for **acquisitions** using the **acquisition method**, allocating **purchase price** to **fair values** of acquired **assets** and assumed **liabilities**, with excess to **goodwill**. Requires significant **judgment** in **fair value estimates**[245](index=245&type=chunk)[246](index=246&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) Primary **liquidity sources** as of June 30, 2025, were **$398.1 million** in **cash and cash equivalents** and a **$550.0 million revolving credit facility**[252](index=252&type=chunk) - The company borrowed **$325.0 million** under the **credit facility** in September 2024 to fund the Airbase Inc. **acquisition** and repaid **$162.5 million** in H2 FY2025, leaving **$162.5 million outstanding**[252](index=252&type=chunk) - A **share repurchase program** authorized up to **$500 million**, with an additional **$500 million** approved in July 2025. In fiscal **2025**, **$149.6 million** was used to repurchase **0.8 million shares**[253](index=253&type=chunk) - **Operations**, **capital expenditures**, **acquisitions**, and **share repurchases** are expected to be funded by **cash flows from operations**, supplemented by **cash on hand** or the **credit facility**[256](index=256&type=chunk) [Cash Flows](index=45&type=section&id=Cash%20Flows) **Cash Flow Summary (Thousands):** | Activity Type | FY2023 | FY2024 | FY2025 | | :---------------------------------------------------------------- | :------- | :------- | :------- | | **Net cash provided by operating activities** | **$282,723** | **$384,670** | **$418,226** | | **Net cash used in investing activities** | **$(220,162)** | **$(101,891)** | **$(455,548)** | | **Net cash provided by (used in) financing activities** | **$(1,434,702)** | **$141,578** | **$(325,821)** | | **Net change in cash, cash equivalents and funds held for clients' cash and cash equivalents** | **$(1,372,141)** | **$424,357** | **$(363,143)** | - **Operating cash flow** increased from **$384.7 million** in FY2024 to **$418.2 million** in FY2025, driven by improved **operating results** and **non-cash adjustments**[261](index=261&type=chunk)[262](index=262&type=chunk) - **Investing cash flow** shifted from **$101.9 million** used in FY2024 to **$455.5 million** used in FY2025, primarily due to **$265.8 million** for the Airbase **acquisition** and less **proceeds** from **available-for-sale securities**[263](index=263&type=chunk)[264](index=264&type=chunk) - **Financing cash flow** changed from **$141.6 million** provided in FY2024 to **$325.8 million** used in FY2025, mainly due to a **$623.0 million change** in **client fund obligations** and **net borrowings** of **$162.5 million** on the **credit facility** for the Airbase **acquisition**[265](index=265&type=chunk) [Capital Expenditures](index=46&type=section&id=Capital%20Expenditures) **Capital Expenditures (Thousands):** | Metric | FY2023 | FY2024 | FY2025 | | :-------------------------------- | :------- | :------- | :------- | | **Capital expenditures** (excluding **capitalized internal-use software**) | **$21,900** | **$18,000** | **$13,100** | | **Capitalized internal-use software costs** | **$45,000** | **$60,700** | **$62,400** | - The company expects to continue investing in **capital spending** for **business growth**, **operating facilities**, **data centers**, and **technical infrastructure**[266](index=266&type=chunk) [Contractual Obligations](index=46&type=section&id=Contractual%20Obligations) As of June 30, 2025, principal commitments include **$162.5 million** in **revolving credit facility borrowings** (not due in next **12 months**), **$64.6 million** in **operating lease obligations** (**$11.0 million** due in next **12 months**), and **$95.5 million** in **purchase obligations** (**$57.6 million** due in next **12 months**)[267](index=267&type=chunk) [New Accounting Pronouncements](index=46&type=section&id=New%20Accounting%20Pronouncements) Refer to Note **2** of the **Notes** to the **Consolidated Financial Statements** for a discussion of recently issued **accounting standards**[268](index=268&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) **Paylocity's operations** are primarily in the United States, exposing it to **market risks** such as **interest rate fluctuations** and general **economic conditions** - **Paylocity's operations** are primarily in the U.S., exposing it to **interest rate** and general **economic condition risks**[269](index=269&type=chunk) - The company does not use **derivatives** to mitigate **market risks**[269](index=269&type=chunk) - As of June 30, 2025, **cash and cash equivalents** were **$398.1 million**, and **funds held for clients** were **$2,704.1 million**, with **investments** in liquid, **investment-grade marketable securities**[270](index=270&type=chunk) - **Interest Rate Sensitivity**: A **100-basis point increase** in **interest rates** would decrease the **market value** of **available-for-sale securities** by **$12.0 million**; a **100-basis point decrease** would increase it by **$12.0 million**[272](index=272&type=chunk)[273](index=273&type=chunk] - **Credit Facility**: **Borrowings** under the **$550.0 million credit facility** bear variable **interest rates** (Term SOFR plus **margin**), exposing the company to **changes** in underlying **index rates**. A hypothetical **100-basis point change** would not significantly impact **results of operations**[272](index=272&type=chunk)[273](index=273&type=chunk] - **Inflation** has not had a material effect on the **business**, but significant **pressures** could prevent offsetting **costs** through **price increases**[274](index=274&type=chunk) [Interest Rate Risk](index=46&type=section&id=Interest%20Rate%20Risk) **Paylocity** is exposed to **interest rate risk** on its **cash**, **cash equivalents** (**$398.1 million**), and **funds held for clients** (**$2,704.1 million**) as of June 30, 2025[270](index=270&type=chunk) - A **100-basis point increase** in **interest rates** would decrease the **market value** of **available-for-sale securities** by **$12.0 million**, while a **100-basis point decrease** would increase it by **$12.0 million**[272](index=272&type=chunk) - **Borrowings** under the **credit facility** (**$162.5 million outstanding** as of June 30, 2025) bear variable **interest rates**, but a hypothetical **100-basis point change** would not significantly impact **results**[273](index=273&type=chunk) [Inflation Risk](index=47&type=section&id=Inflation%20Risk) **Inflation** has not had a material effect on **Paylocity's business**, **financial condition**, or **results of operations**[274](index=274&type=chunk) - Significant **inflationary pressures** could prevent the company from fully offsetting higher **costs** through **price increases**, potentially harming the **business**[274](index=274&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=47&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item incorporates by reference the **consolidated financial statements** and accompanying **notes**, which begin on page F-1 of this **Annual Report** on Form **10-K** - **Financial statements** and **supplementary data** are incorporated by reference from page F-1 of the Form **10-K**[275](index=275&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=47&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no **changes** in or **disagreements** with **accountants** on **accounting** and **financial disclosure** - No **changes** in or **disagreements** with **accountants** on **accounting** and **financial disclosure** were reported[276](index=276&type=chunk) [Item 9A. Controls and Procedures](index=47&type=section&id=Item%209A.%20Controls%20and%20Procedures) **Paylocity's management**, including the CEO and CFO, evaluated the **effectiveness** of its **disclosure controls** and **procedures** as of June 30, 2025, concluding they were effective - **Disclosure controls** and **procedures** were evaluated as effective as of June 30, 2025[278](index=278&type=chunk) - **Management** concluded that **internal control** over **financial reporting** was effective as of June 30, 2025, based on the COSO (**2013**) framework[281](index=281&type=chunk) - The **assessment** of **internal control** over **financial reporting** excluded Airbase Inc., acquired in October 2024, which represented **9%** of **total assets** and less than **2%** of **total revenues**[282](index=282&type=chunk) - No material **changes** in **internal control** over **financial reporting** occurred during the fiscal quarter ended June 30, 2025[284](index=284&type=chunk) [Disclosure Controls and Procedures](index=47&type=section&id=Disclosure%20Controls%20and%20Procedures) **Management**, with CEO and CFO participation, concluded that **disclosure controls** and **procedures** were effective as of June 30, 2025[278](index=278&type=chunk) [Management's Report on Internal Control Over Financial Reporting and Attestation Report of the Registered Public Accounting Firm](index=47&type=section&id=Management%27s%20Report%20on%20Internal%20Control%20Over%20Financial%20Reporting%20and%20Attestation%20Report%20of%20the%20Registered%20Public%20Accounting%20Firm) **Management** concluded that **internal control** over **financial reporting** was effective as of June 30, 2025, based on the COSO (**2013**) framework[281](index=281&type=chunk) - The **assessment** excluded Airbase Inc., acquired in October 2024, which represented **9%** of **total assets** and less than **2%** of **total revenues**[282](index=282&type=chunk) - The independent registered **public accounting firm** also audited and reported on the **effectiveness** of **internal control** over **financial reporting**[283](index=283&type=chunk) [Changes in Internal Control Over Financial Reporting](index=48&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No **changes** in **internal control** over **financial reporting** materially affected or are reasonably likely to materially affect **internal control** over **financial reporting** during the fiscal quarter ended June 30, 2025[284](index=284&type=chunk) [Limitations on Controls](index=48&type=section&id=Limitations%20on%20Controls) **Control systems** are designed to provide reasonable, not absolute, **assurance** and may not prevent or detect all **errors** and **fraud**[285](index=285&type=chunk) [Item 9B. Other Information](index=48&type=section&id=Item%209B.%20Other%20Information) This item contains no other information - No other information was reported[286](index=286&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=48&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item contains no **disclosure** regarding **foreign jurisdictions** that prevent **inspections** - No **disclosure** regarding **foreign jurisdictions** that prevent **inspections** was reported[287](index=287&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=49&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) **Information** regarding **directors**, **executive officers**, and **corporate governance** is incorporated by reference from the **Proxy Statement** for the **2026 annual meeting** of **stockholders**, to be filed within **120 days** after June 30, 2025 - **Information** on **directors**, **executive officers**, and **corporate governance** is incorporated by reference from the **2026 Proxy Statement**[289](index=289&type=chunk) [Item 11. Executive Compensation](index=49&type=section&id=Item%2011.%20Executive%20Compensation) **Information** regarding **executive compensation** is incorporated by reference from the **Proxy Statement** for the **2026 annual meeting** of **stockholders**, to be filed within **120 days** after June 30, 2025 - **Information** on **executive compensation** is incorporated by reference from the **2026 Proxy Statement**[290](index=290&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=49&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) **Information** regarding **security ownership** of certain **beneficial owners** and **management**, and related **stockholder matters**, is incorporated by reference from the **Proxy Statement** for the **2026 annual meeting** of **stockholders**, to be filed within **120 days** after June 30, 2025 - **Information** on **security ownership** and related **stockholder matters** is incorporated by reference from the **2026 Proxy Statement**[291](index=291&type=chunk) [Item 13. Certain Relationships and Related Transactions and Director Independence](index=49&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) **Information** regarding certain **relationships** and **related transactions**, and **director independence**, is incorporated by reference from the **Proxy Statement** for the **2026 annual meeting** of **stockholders**, to be filed within **120 days** after June 30, 2025 - **Information** on certain **relationships**, **related transactions**, and **director independence** is incorporated by referen

Paylocity (PCTY) came out with quarterly earnings of $1.56 per share, beating the Zacks Consensus Estimate of $1.38 per share. This compares to earnings of $1.48 per share a year ago. These figures are adjusted for non- recurring items. This quarterly report represents an earnings surprise of +13.04%. A quarter ago, it was expected that this provider of cloud-based payroll and human-resources software services would post earnings of $2.09 per share when it actually produced earnings of $2.43, delivering a s ...

Financial Data and Key Metrics Changes - Recurring revenue for Q4 was $369.9 million, an increase of 14%, with total revenue up 12% year-over-year [15] - For fiscal year 2025, recurring revenue grew 15% and total revenue grew 14%, ending the year with $1.6 billion in revenue [8][15] - Adjusted EBITDA for Q4 was $130.7 million, representing a 32.6% margin, exceeding guidance by $8 million [15] - Fiscal year 2025 adjusted EBITDA was $583 million, a 36.5% margin, reflecting a 15% increase from fiscal year 2024 [15] - Free cash flow margin for fiscal year 2025 was 21.5%, a 12% increase year-over-year [16] Business Line Data and Key Metrics Changes - Average revenue per client reached over $35,300 in fiscal year 2025, up approximately 8% from $32,800 in fiscal year 2024 [9] - The client base grew by 7% to 41,650 existing clients [9] Market Data and Key Metrics Changes - The broker channel represented more than 25% of new business in fiscal year 2025, indicating strong channel performance [12] - Revenue retention remained consistent at greater than 92% in fiscal year 2025 [12] Company Strategy and Development Direction - The launch of Paylocity for Finance aims to unify finance and HR functions, enhancing product offerings and driving future growth [9][12] - Continued investment in R&D is seen as crucial for product differentiation and future growth, with R&D investments at 14.3% of revenue for fiscal year 2025 [16][17] - The company is focused on expanding its sales force and enhancing productivity to drive recurring revenue growth [11] Management's Comments on Operating Environment and Future Outlook - Management noted a stable demand environment throughout fiscal year 2025, with consistent year-over-year growth in units and ARPU [30] - The company expressed confidence in its differentiated value proposition and operational strength, setting a positive outlook for fiscal year 2026 [21][22] Other Important Information - The company repurchased approximately 315,000 shares in Q4 at an average price of $178.21 per share, totaling $56 million [19] - The board increased the share repurchase authorization by an additional $500 million [20] Q&A Session Summary Question: How do we think about the demand environment right now? - Management observed a stable demand environment with consistent growth in units and ARPU throughout fiscal year 2025 [30] Question: Can you help us understand the significant jump in sales and marketing expenses? - The increase was attributed to typical year-end timing, including bonus payments and hiring in Q4 [32] Question: Does the integration of Airbase mean it's complete? - The first phase of integration is complete, with ongoing opportunities for further integration and enhancements [38] Question: What are the expectations for Paylocity for Finance? - Early feedback is positive, with expectations for gradual adoption and higher revenue per client compared to typical HCM modules [50][52] Question: What is the current stage of AI investments for internal operations? - The company is in the early stages of AI integration, with ongoing investments expected to enhance client experience and operational efficiency [67][68] Question: What is the retention rate for fiscal year 2025? - Retention remained strong at over 92%, with no significant changes noted [69]

Financial Data and Key Metrics Changes - Recurring revenue for Q4 was $369.9 million, an increase of 14%, with total revenue up 12% year-over-year [14] - For fiscal year 2025, recurring revenue grew 15% and total revenue grew 14%, ending the year with $1.6 billion in revenue [6][14] - Adjusted EBITDA for Q4 was $130.7 million, representing a 32.6% margin, exceeding guidance by $8 million [14] - Free cash flow margin for fiscal 2025 was 21.5%, a 12% increase year-over-year [15] Business Line Data and Key Metrics Changes - Average revenue per client reached approximately $35,300 in fiscal 2025, an increase of about 8% from $32,800 in fiscal 2024 [8] - The client base grew by 7% to 41,650 existing clients [8] Market Data and Key Metrics Changes - The broker channel represented more than 25% of new business in fiscal 2025, indicating strong channel performance [10] - Revenue retention remained consistent at over 92% in fiscal 2025 [11] Company Strategy and Development Direction - The launch of Paylocity for Finance aims to unify finance and HR functions, enhancing product offerings and driving future growth [6][11] - Continued investment in R&D, with total R&D investments at 14.3% of revenue for fiscal 2025, reflecting a 14% year-over-year increase [15] - The company is focused on integrating Airbase into its platform, with ongoing enhancements expected quarterly [38] Management's Comments on Operating Environment and Future Outlook - Management noted a stable demand environment throughout fiscal 2025, with strong execution from the sales team contributing to results [29][106] - The company remains confident in its differentiated value proposition and operational strength as it enters fiscal 2026 [19][20] Other Important Information - The company repurchased approximately 315,000 shares in Q4 at an average price of $178.21 per share, totaling $56 million [17] - The board increased the share repurchase authorization by an additional $500 million [18] Q&A Session Summary Question: How do we think about the demand environment right now? - Management observed a stable demand environment throughout fiscal 2025, with consistent year-over-year growth in units and ARPU [29] Question: Can you help us understand the significant jump in sales and marketing expenses? - The increase was attributed to typical year-end timing, including bonus payments and hiring in Q4 [31] Question: Does the integration of Airbase mean it's complete? - The first phase of integration is complete, with opportunities for further integration and enhancements expected [38] Question: Any insights on free cash flow outlook for fiscal 2026? - Management indicated potential tailwinds from new tax legislation that could reduce federal taxes and positively impact free cash flow [40] Question: What are the expectations for Paylocity for Finance? - Early feedback from customers has been positive, with expectations for gradual penetration into the existing client base [50] Question: How does the launch of Paylocity for Finance change the competitive landscape? - The integrated platform offers significant value, differentiating the company from competitors in the HCM space [80]

Financial Performance & Growth - Total revenue has grown consistently, with FY25 reaching $1595 million and a projected $1715 million for FY26 [9] - The company anticipates a 12% year-over-year (YoY) growth in total revenue [9] - Adjusted EBITDA shows increasing profitability, reaching $583 million in FY25 and a projected $614 million in FY26 [9] - The company has successfully driven approximately 400 basis points of Adjusted EBITDA margin leverage since FY23 [57] - Free Cash Flow (FCF) also demonstrates leverage, reaching $219 million in FY25 [59] Market & Product Strategy - The company estimates a Realized HCM Total Addressable Market (TAM) of approximately $22 billion [12] - The company has penetrated approximately 3% of its addressable market [13] - Over 25% of new client revenue comes from referrals from channels [46] - The company has over 92% net revenue retention as a public company [47] - Total Non-GAAP R&D investment has increased to $227 million in FY25 [24]

Press Release Overview [Executive Summary](index=1&type=section&id=Executive_Summary) Paylocity announced strong financial results for the fourth quarter and full fiscal year 2025, driven by solid sales, operational execution, and continued expansion of average revenue per client, alongside a 7% increase in its client base. The company also launched 'Paylocity for Finance' and returned capital to shareholders through share repurchases - Fiscal Year 2025 saw strong performance with **15% recurring and other revenue growth** and **14% total revenue growth**[2](index=2&type=chunk) - Growth was driven by continued expansion of average revenue per client and a **7% increase in the client base**[2](index=2&type=chunk) - Launched 'Paylocity for Finance,' expanding the modern workforce platform into the Office of the CFO to unify finance and HR teams[2](index=2&type=chunk) - Returned capital to shareholders by repurchasing **$150 million** (approximately **800,000 shares**) of stock during FY25[2](index=2&type=chunk) [Key Recent Achievements](index=1&type=section&id=Key_Recent_Achievements) Paylocity achieved significant financial growth in FY25, including double-digit revenue increases and substantial share repurchases, alongside the strategic launch of Paylocity for Finance to expand its platform capabilities Key Revenue Highlights (Q4 & FY 2025) | Metric | Q4 2025 | YoY Change | FY 2025 | YoY Change | | :-------------------------- | :---------- | :--------- | :---------- | :--------- | | Recurring & Other Revenue | $369.9 million | +14% | $1,471.8 million | +15% | | Total Revenue | $400.7 million | +12% | $1,595.2 million | +14% | - Repurchased **800,000 shares** of common stock for **$150 million** during FY 2025[5](index=5&type=chunk) - Increased share repurchase authorization by **$500 million**[5](index=5&type=chunk) - Announced the launch of Paylocity for Finance, expanding the platform's reach into the Office of the CFO, unifying HR and Finance through a single system of record[5](index=5&type=chunk) Financial Performance [Fourth Quarter Fiscal 2025 Financial Highlights](index=1&type=section&id=Fourth_Quarter_Fiscal_2025_Financial_Highlights) Paylocity reported solid fourth-quarter growth with recurring and total revenue increasing by 14% and 12% respectively. GAAP operating income saw a modest increase, while GAAP net income remained stable year-over-year. Adjusted EBITDA also showed healthy growth [Revenue](index=1&type=section&id=Q4_Revenue) Q4 2025 Revenue Performance | Metric | Q4 2025 | Q4 2024 | YoY Change | | :-------------------------- | :---------- | :---------- | :--------- | | Recurring & Other Revenue | $369.9 million | $324.7 million | +14% | | Total Revenue | $400.7 million | $357.3 million | +12% | [Operating Income](index=2&type=section&id=Q4_Operating_Income) Q4 2025 Operating Income | Metric | Q4 2025 | Q4 2024 | | :-------------------- | :---------- | :---------- | | GAAP Operating Income | $66.2 million | $62.9 million | | Non-GAAP Operating Income | $105.6 million | $96.3 million | [Net Income](index=2&type=section&id=Q4_Net_Income) Q4 2025 Net Income | Metric | Q4 2025 | Q4 2024 | | :-------------------- | :---------- | :---------- | | GAAP Net Income | $48.6 million | $48.8 million | | GAAP Diluted EPS | $0.86 | $0.86 | | Diluted Shares Outstanding | 56.3 million | 56.9 million | [Adjusted EBITDA](index=2&type=section&id=Q4_Adjusted_EBITDA) Q4 2025 Adjusted EBITDA | Metric | Q4 2025 | Q4 2024 | | :------------------------------------------------ | :---------- | :---------- | | Adjusted EBITDA | $130.7 million | $120.2 million | | Adjusted EBITDA (excl. interest income on client funds) | $99.9 million | $87.6 million | [Fiscal Year 2025 Financial Highlights](index=1&type=section&id=Fiscal_Year_2025_Financial_Highlights) Paylocity delivered strong full fiscal year 2025 results, with total revenue growing 14% and GAAP net income increasing 10%. Adjusted EBITDA also saw a significant 15% rise, demonstrating robust profitability and operational efficiency. The company also strengthened its balance sheet and generated substantial free cash flow [Revenue](index=1&type=section&id=FY25_Revenue) FY 2025 Revenue Performance | Metric | FY 2025 | FY 2024 | YoY Change | | :-------------------------- | :---------- | :---------- | :--------- | | Recurring & Other Revenue | $1,471.8 million | $1,281.7 million | +15% | | Total Revenue | $1,595.2 million | $1,402.5 million | +14% | [Operating Income](index=2&type=section&id=FY25_Operating_Income) FY 2025 Operating Income | Metric | FY 2025 | FY 2024 | | :-------------------- | :---------- | :---------- | | GAAP Operating Income | $304.0 million | $260.1 million | | Non-GAAP Operating Income | $484.4 million | $421.9 million | [Net Income](index=1&type=section&id=FY25_Net_Income) FY 2025 Net Income | Metric | FY 2025 | FY 2024 | YoY Change | | :-------------------- | :---------- | :---------- | :--------- | | GAAP Net Income | $227.1 million | $206.8 million | +10% | | GAAP Diluted EPS | $4.02 | $3.63 | +10.7% | | Diluted Shares Outstanding | 56.6 million | 57.0 million | | [Adjusted EBITDA](index=1&type=section&id=FY25_Adjusted_EBITDA) FY 2025 Adjusted EBITDA | Metric | FY 2025 | FY 2024 | YoY Change | | :------------------------------------------------ | :---------- | :---------- | :--------- | | Adjusted EBITDA | $583.0 million | $505.6 million | +15% | | Adjusted EBITDA Margin | 36.5% | 36.0% | +0.5 pp | | Adjusted EBITDA (excl. interest income on client funds) | $459.6 million | $384.7 million | +19% | | Adjusted EBITDA (excl. interest income on client funds) Margin | 31.2% | 30.0% | +1.2 pp | [Balance Sheet and Cash Flow](index=2&type=section&id=FY25_Balance_Sheet_and_Cash_Flow) FY 2025 Balance Sheet and Cash Flow Highlights | Metric | FY 2025 | FY 2024 | YoY Change | | :------------------------------------------------ | :---------- | :---------- | :--------- | | Cash and Cash Equivalents (end of year) | $398.1 million | $401.8 million | -0.9% | | Long-term Debt (end of year) | $162.5 million | $0 | N/A | | Net Cash Provided by Operating Activities | $418.2 million | $384.7 million | +8.7% | | Free Cash Flow | $342.8 million | $305.9 million | +12.0% | | Free Cash Flow Margin | 21.5% | 21.8% | -0.3 pp | | Free Cash Flow (excl. interest income on client funds) | $219.3 million | $185.1 million | +18.5% | | Free Cash Flow (excl. interest income on client funds) Margin | 14.9% | 14.4% | +0.5 pp | - Repaid approximately **$162.5 million** on outstanding long-term debt during the second half of fiscal year 2025, incurred to fund the acquisition of Airbase on October 1, 2024[13](index=13&type=chunk) Business Outlook [First Quarter 2026 Guidance](index=3&type=section&id=First_Quarter_2026_Guidance) For Q1 2026, Paylocity expects recurring and other revenue to grow approximately 12% to $370.0-$375.0 million, and total revenue to grow approximately 10% to $397.5-$402.5 million. Adjusted EBITDA is projected to be between $131.0 million and $135.0 million Q1 FY26 Financial Guidance | Metric | Q1 FY26 Guidance | Growth vs. Q1 FY25 | | :------------------------------------------------ | :-------------------- | :----------------- | | Recurring & Other Revenue | $370.0M - $375.0M | ~12% | | Total Revenue | $397.5M - $402.5M | ~10% | | Adjusted EBITDA | $131.0M - $135.0M | | | Adjusted EBITDA (excl. interest income on client funds) | $103.5M - $107.5M | | [Fiscal Year 2026 Guidance](index=3&type=section&id=Fiscal_Year_2026_Guidance) For FY 2026, the company anticipates recurring and other revenue of $1.597-$1.612 billion (approx. 9% growth) and total revenue of $1.707-$1.722 billion (approx. 8% growth). Adjusted EBITDA is forecast to be $608.5-$618.5 million FY 2026 Financial Guidance | Metric | FY26 Guidance | Growth vs. FY25 | | :------------------------------------------------ | :-------------------- | :----------------- | | Recurring & Other Revenue | $1.597B - $1.612B | ~9% | | Total Revenue | $1.707B - $1.722B | ~8% | | Adjusted EBITDA | $608.5M - $618.5M | | | Adjusted EBITDA (excl. interest income on client funds) | $498.5M - $508.5M | | - The company is unable to reconcile forward-looking non-GAAP financial measures to their directly comparable GAAP financial measures due to unavailable information without unreasonable effort[18](index=18&type=chunk) Company Information [Conference Call Details](index=3&type=section&id=Conference_Call_Details) Paylocity hosted a conference call on August 5, 2025, to discuss its Q4 and FY25 results, with webcast and replay details provided for investors - Conference call held on **August 5, 2025**, at **4:00 p.m. Central Time** (**5:00 p.m. Eastern Time**)[19](index=19&type=chunk) - Live audio webcast and replay available through https://investors.paylocity.com/events-and-presentations[19](index=19&type=chunk) [About Paylocity](index=3&type=section&id=About_Paylocity) Paylocity is a leading cloud-based provider of HR, payroll, and spend management software solutions, founded in 1997 and publicly traded since 2014, known for its intuitive product suite and strong company culture - Paylocity is a leading provider of cloud-based HR, payroll, and spend management software solutions[20](index=20&type=chunk) - Founded in **1997** and publicly traded since **2014**, headquartered in Schaumburg, IL[20](index=20&type=chunk) - Offers an intuitive, easy-to-use product suite that helps businesses with automation, data-driven insights, and engagement to create great workplaces[20](index=20&type=chunk) Supplemental Information [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP_Financial_Measures) This section explains Paylocity's use of non-GAAP financial measures, which management considers important supplemental performance indicators for planning and evaluating financial and operational performance, and provides detailed reconciliations to their most directly comparable GAAP measures [Explanation of Non-GAAP Measures](index=4&type=section&id=Explanation_of_Non-GAAP_Measures) - Non-GAAP financial measures are used as important supplemental measures for planning, performance analysis, budgeting, and evaluating financial and operational performance[22](index=22&type=chunk) - Definitions are provided for Adjusted EBITDA, Adjusted Gross Profit, Non-GAAP Operating Income, Non-GAAP Net Income, Non-GAAP Sales and Marketing Expense, Non-GAAP Total Research and Development, Non-GAAP General and Administrative Expense, and Free Cash Flow[37](index=37&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=8&type=section&id=Reconciliation_of_GAAP_to_Non-GAAP_Financial_Measures) Reconciliation from Gross Profit to Adjusted Gross Profit (FY25 vs FY24) | Metric (in thousands) | FY 2025 | FY 2024 | | :------------------------------------------------ | :---------- | :---------- | | Gross profit | $1,096,998 | $960,786 | | Amortization of capitalized internal-use software costs | 59,948 | 45,246 | | Amortization of certain acquired intangibles | 16,168 | 7,907 | | Stock-based compensation expense and employer payroll taxes | 19,314 | 20,350 | | Other items (1) | 1,365 | 469 | | **Adjusted gross profit** | **$1,193,793** | **$1,034,758** | Reconciliation from Operating Income to Non-GAAP Operating Income (FY25 vs FY24) | Metric (in thousands) | FY 2025 | FY 2024 | | :------------------------------------------------ | :---------- | :---------- | | Operating income | $304,024 | $260,093 | | Stock-based compensation expense and employer payroll taxes | 150,063 | 152,446 | | Amortization of acquired intangibles | 19,120 | 10,436 | | Other items (2) | 11,182 | (1,091) | | **Non-GAAP Operating income** | **$484,389** | **$421,884** | Reconciliation from Net Income to Non-GAAP Net Income (FY25 vs FY24) | Metric (in thousands) | FY 2025 | FY 2024 | | :------------------------------------------------ | :---------- | :---------- | | Net income | $227,127 | $206,766 | | Stock-based compensation expense and employer payroll taxes | 150,063 | 152,446 | | Amortization of acquired intangibles | 19,120 | 10,436 | | Other items (2) | 11,182 | (1,091) | | Income tax effect on adjustments (3) | (1,842) | 5,493 | | **Non-GAAP Net income** | **$405,650** | **$374,050** | | Diluted weighted-average number of common shares | 56,550 | 56,976 | | **Non-GAAP Net income per share** | **$7.17** | **$6.57** | Reconciliation from Net Income to Adjusted EBITDA (FY25 vs FY24) | Metric (in thousands) | FY 2025 | FY 2024 | | :------------------------------------------------ | :---------- | :---------- | | Net income | $227,127 | $206,766 | | Interest expense | 13,053 | 758 | | Income tax expense | 81,936 | 70,249 | | Depreciation and amortization expense | 99,636 | 76,426 | | **EBITDA** | **421,752** | **354,199** | | Stock-based compensation expense and employer payroll taxes | 150,063 | 152,446 | | Other items (2) | 11,182 | (1,091) | | **Adjusted EBITDA** | **$582,997** | **$505,554** | | Interest income on funds held for clients | (123,420) | (120,835) | | **Adjusted EBITDA excluding interest income on funds held for clients** | **$459,577** | **$384,719** | Reconciliation of Free Cash Flow (FY25 vs FY24) | Metric (in thousands) | FY 2025 | FY 2024 | | :------------------------------------------------ | :---------- | :---------- | | Net cash provided by operating activities | $418,226 | $384,670 | | Capitalized internal-use software costs | (62,402) | (60,726) | | Purchases of property and equipment | (13,073) | (18,028) | | **Free cash flow** | **$342,751** | **$305,916** | | Less: Interest income on funds held for clients | (123,420) | (120,835) | | **Free cash flow excluding interest income on funds held for clients** | **$219,331** | **$185,081** | | Cash paid for other items (6) | 8,032 | 2,039 | | **Adjusted free cash flow excluding interest income on funds held for clients** | **$227,363** | **$187,120** | [Safe Harbor/Forward Looking Statements](index=4&type=section&id=Safe_Harbor_Forward_Looking_Statements) This section contains cautionary statements regarding forward-looking information, highlighting that actual results may differ materially due to various risks and uncertainties, including general economic conditions, interest rate changes, business disruptions, AI technology leverage, client retention, cybersecurity threats, and regulatory changes - Forward-looking statements involve substantial risks and uncertainties, and actual results or events could differ materially from expectations[23](index=23&type=chunk) - Factors that could cause differences include general economic conditions, changes in interest rates, business disruptions, ability to leverage AI, client retention, cybersecurity threats, and regulatory uncertainty[23](index=23&type=chunk) - Paylocity disclaims any obligation to update or alter these forward-looking statements in the future, unless legally required[23](index=23&type=chunk) Consolidated Financial Statements [Consolidated Balance Sheets](index=5&type=section&id=Consolidated_Balance_Sheets) The consolidated balance sheets show Paylocity's financial position as of June 30, 2025, and June 30, 2024, detailing assets, liabilities, and stockholders' equity. Total assets increased to $4.39 billion in FY25 from $4.25 billion in FY24 Consolidated Balance Sheets (as of June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :---------- | :---------- | | Total Assets | $4,389,428 | $4,245,460 | | Total Liabilities | $3,155,681 | $3,212,396 | | Total Stockholders' Equity | $1,233,747 | $1,033,064 | | Cash and cash equivalents | $398,070 | $401,811 | | Funds held for clients | $2,704,137 | $2,952,060 | | Long-term debt | $162,500 | — | [Consolidated Statements of Operations and Comprehensive Income](index=6&type=section&id=Consolidated_Statements_of_Operations_and_Comprehensive_Income) The consolidated statements of operations and comprehensive income detail Paylocity's revenues, costs, and profitability for the three months and full fiscal years ended June 30, 2025, and 2024, showing growth in total revenues and net income Consolidated Statements of Operations (Year Ended June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :---------- | :---------- | | Total revenues | $1,595,221 | $1,402,515 | | Gross profit | $1,096,998 | $960,786 | | Operating income | $304,024 | $260,093 | | Net income | $227,127 | $206,766 | | Diluted Net income per share | $4.02 | $3.63 | Consolidated Statements of Operations (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------------- | :---------- | :---------- | | Total revenues | $400,737 | $357,287 | | Gross profit | $271,872 | $240,407 | | Operating income | $66,227 | $62,909 | | Net income | $48,606 | $48,819 | | Diluted Net income per share | $0.86 | $0.86 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated_Statements_of_Cash_Flows) The consolidated statements of cash flows illustrate the sources and uses of cash for operating, investing, and financing activities for the fiscal years ended June 30, 2025, 2024, and 2023, showing increased cash flow from operations and significant investing outflows due to acquisitions Consolidated Statements of Cash Flows (Year Ended June 30, in thousands) | Metric | 2025 | 2024 | 2023 | | :-------------------------------- | :---------- | :---------- | :---------- | | Net cash provided by operating activities | $418,226 | $384,670 | $282,723 | | Net cash used in investing activities | $(455,548) | $(101,891) | $(220,162) | | Net cash provided by (used in) financing activities | $(325,821) | $141,578 | $(1,434,702) | | Acquisitions of businesses, net of cash acquired | $(277,851) | $(12,031) | — | | Repurchases of common shares | $(149,638) | $(150,000) | — |

Core Insights - Paylocity Holding Corporation reported strong financial results for fiscal year 2025, with a 14% increase in total revenue and a 15% increase in recurring and other revenue, driven by client base expansion and increased average revenue per client [2][5][6] Financial Performance - For Q4 2025, total revenue reached $400.7 million, up 12% year-over-year, while recurring and other revenue was $369.9 million, up 14% year-over-year [5][6] - Fiscal year 2025 total revenue was $1,595.2 million, a 14% increase from fiscal year 2024, with recurring and other revenue at $1,471.8 million, reflecting a 15% growth [6][10] - GAAP net income for Q4 2025 was $48.6 million, or $0.86 per share, compared to $48.8 million, or $0.86 per share in Q4 2024 [7][10] - For fiscal year 2025, GAAP net income increased to $227.1 million, or $4.02 per share, from $206.8 million, or $3.63 per share in fiscal year 2024 [10][6] Operational Highlights - The company launched "Paylocity for Finance," integrating finance and HR teams through a unified system, enhancing operational efficiency and user experience [2][5] - Paylocity repurchased approximately 800,000 shares of its stock for $150 million during fiscal year 2025 and increased share repurchase authorization by $500 million [5][6] Adjusted Metrics - Adjusted EBITDA for fiscal year 2025 was $583.0 million, a 15% increase from $505.6 million in fiscal year 2024, representing 36.5% of total revenue [6][14] - Free cash flow for fiscal year 2025 was $342.8 million, or 21.5% of total revenue, compared to $305.9 million, or 21.8% of total revenue in fiscal year 2024 [21] Guidance - For Q1 2026, recurring and other revenue is expected to be between $370.0 million and $375.0 million, indicating approximately 12% growth over Q1 2025 [22] - Total revenue for Q1 2026 is projected to be between $397.5 million and $402.5 million, representing about 10% growth over Q1 2025 [22] - For fiscal year 2026, recurring and other revenue is expected to be in the range of $1.597 billion to $1.612 billion, reflecting approximately 9% growth over fiscal year 2025 [22]

Core Viewpoint - Paylocity (PCTY) is anticipated to report a year-over-year decline in earnings despite an increase in revenues for the quarter ended June 2025, with the consensus outlook indicating a significant factor that could influence its near-term stock price [1][2]. Financial Expectations - The upcoming earnings report is expected to show quarterly earnings of $1.38 per share, reflecting a year-over-year decrease of 6.8%, while revenues are projected to reach $388.7 million, an increase of 8.8% from the previous year [3]. - The consensus EPS estimate has been revised 1.84% higher in the last 30 days, indicating a reassessment by analysts regarding the company's earnings prospects [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates a positive Earnings ESP of +4.45% for Paylocity, suggesting that analysts have recently become more optimistic about the company's earnings [12]. - However, the stock holds a Zacks Rank of 4, which complicates the prediction of an earnings beat [12]. Historical Performance - In the last reported quarter, Paylocity exceeded the expected earnings of $2.09 per share by delivering $2.43, resulting in a surprise of +16.27% [13]. - Over the past four quarters, the company has consistently beaten consensus EPS estimates [14]. Industry Comparison - Palantir Technologies Inc. (PLTR), another player in the Zacks Internet - Software industry, is expected to report earnings per share of $0.14 for the same quarter, marking a year-over-year increase of 55.6%, with revenues projected at $938.33 million, up 38.4% from the previous year [18][19].