Core Viewpoint - Baird has lowered the price target for Paylocity (PCTY) to $220 from $245 while maintaining an Outperform rating on the shares, indicating a positive outlook despite the price adjustment [1] Summary by Category Price Target Adjustment - The price target for Paylocity has been reduced to $220 from $245 [1] Rating - Baird continues to hold an Outperform rating on Paylocity shares, suggesting confidence in the company's performance [1] Financial Performance - The model update by Baird follows results that demonstrated significant improvements in margins and free cash flow for Paylocity [1]

Key Takeaways PCTY reported Q2 fiscal 2026 EPS of $1.85, beating estimates as revenues increased 10.4% year over year.Paylocity's recurring and other revenues rose 11.3% to $387 million, accounting for 93% of total revenues.PCTY raised long-term targets, including a $3 billion revenue goal and higher adjusted EBITDA margins.Paylocity (PCTY) reported second-quarter fiscal 2026 non-GAAP net income of $1.85 per share, beating the Zacks Consensus Estimate by 17.83%. Paylocity's revenues rose 10.4% year over yea ...

Revenue Growth - Total revenues increased from $377.0 million for the three months ended December 31, 2024 to $416.1 million for the three months ended December 31, 2025, representing a 10% year-over-year increase [88]. - Total revenues for the three months ended December 31, 2025, increased by $39.3 million, or 10.4%, to $416.1 million from $376.9 million for the same period in 2024 [112]. - Recurring and other revenue accounted for 92% and 93% of total revenues for the three months ended December 31, 2024 and 2025, respectively [96]. - Recurring and other revenue for the six months ended December 31, 2025, increased by $85.0 million, or 12%, to $765.8 million from $680.8 million for the same period in 2024 [123]. Profitability Metrics - Adjusted Gross Profit for the three months ended December 31, 2025 was $309.5 million, up from $278.2 million in the same period of 2024, reflecting a year-over-year increase of 11% [92]. - Adjusted EBITDA for the three months ended December 31, 2025 was $142.7 million, compared to $126.2 million for the same period in 2024, indicating a year-over-year increase of 13% [93]. - Operating income for the three months ended December 31, 2025, increased by $23.8 million, or 51%, to $70.4 million from $46.6 million for the same period in 2024 [112]. - Net income for the three months ended December 31, 2025, increased by $12.7 million, or 33.9%, to $50.2 million from $37.5 million for the same period in 2024 [112]. - Gross profit margin improved from 67% for the three months ended December 31, 2024, to 68% for the same period in 2025 [115]. Expenses - Sales and marketing expenses are expected to continue increasing in absolute dollars as the company grows its sales organization and expands marketing activities [102]. - Sales and marketing expenses for the three months ended December 31, 2025, increased by $4.9 million, or 5%, to $98.1 million from $93.1 million for the same period in 2024 [116]. - Research and development expenses for the three months ended December 31, 2025 totaled $76.4 million, up from $73.4 million in the same period of 2024 [105]. - Research and development expenses for the three months ended December 31, 2025, increased by $1.6 million, or 3%, to $57.7 million from $56.2 million for the same period in 2024 [117]. - General and administrative expenses rose by $4.9 million, or 5%, to $109.5 million for the six months ended December 31, 2025, from $104.7 million in 2024 [129]. Cash Flow and Investments - Net cash provided by operating activities was $203.5 million for the six months ended December 31, 2025, up from $145.7 million in 2024 [147]. - Net cash used in investing activities decreased significantly to $27.5 million for the six months ended December 31, 2025, compared to $301.0 million in 2024 [148]. - Net cash provided by financing activities increased to $2,403.7 million for the six months ended December 31, 2025, from $835.5 million in 2024, primarily due to a net change in client fund obligations [150]. - Capital expenditures were $7.2 million for the six months ended December 31, 2025, compared to $5.3 million in 2024, excluding capitalized internal-use software costs [153]. Taxation - The effective tax rate for the three months ended December 31, 2025, was 28.5%, up from 20.0% for the same period in 2024 [121]. - The effective tax rate increased to 32.3% for the six months ended December 31, 2025, compared to 24.8% in 2024, primarily due to stock-based compensation shortfalls and state and local income taxes [131][132]. Market and Economic Conditions - Inflation has not had a material effect on the company's business, but significant inflationary pressures could harm its financial condition and results of operations [162]. - The company does not anticipate significant impacts on operations from hypothetical changes of 100 basis points in interest rates [161]. Financial Position - As of December 31, 2025, the company had $162.5 million in cash and cash equivalents and a $550.0 million revolving credit facility [138]. - The company maintains a revolving credit facility of $550.0 million, which can be increased to $825.0 million, with $81.3 million in borrowings outstanding as of December 31, 2025 [161]. - As of December 31, 2025, the company had cash and cash equivalents of $162.5 million and funds held for clients amounting to $5,510.2 million [157]. Interest Rate Exposure - Interest income on funds held for clients is generated from advance collections for payroll and related services, contributing to overall revenue [98]. - Interest income on funds held for clients for the three months ended December 31, 2025, was flat at $29.2 million compared to $29.3 million for the same period in 2024 [114]. - An immediate 100-basis point increase in interest rates would decrease the market value of available-for-sale securities by $12.6 million, while a decrease of 100 basis points would increase the market value by $13.0 million [159]. - Interest rates applicable to the credit facility are variable, exposing the company to market risk from changes in underlying index rates [161]. - The company has not recorded any credit impairment losses on its portfolio to date [158]. - The investment policy focuses on generating higher yields while preserving liquidity and capital, exposing the company to interest rate changes [157]. - Fluctuations in the value of available-for-sale securities are recorded in other comprehensive income and realized only upon sale [160].

Jefferies sets a new price target for Paylocity (NASDAQ:PCTY) at $150, indicating an 18.06% potential upside.The company's Q2 2026 earnings call highlights a commitment to innovation and customer satisfaction.Paylocity's current market capitalization stands at approximately $7 billion, with a trading volume of 2,164,293 shares.Paylocity Holding Corporation, listed on NASDAQ under the symbol PCTY, is a prominent player in the human capital management industry. The company offers cloud-based payroll and human ...

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Paylocity (PCTY) came out with quarterly earnings of $1.85 per share, beating the Zacks Consensus Estimate of $1.57 per share. This compares to earnings of $1.52 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +18.05%. A quarter ago, it was expected that this provider of cloud-based payroll and human-resources software services would post earnings of $1.5 per share when it actually produced earnings of $1.75, delivering a surp ...

Paylocity (NasdaqGS:PCTY) Q2 2026 Earnings call February 05, 2026 05:00 PM ET Company ParticipantsAustin Cole - Equity Research AssociateBrad Reback - Managing DirectorDaniel Jester - Managing Director of Software ResearchJared Levine - Equity Research DirectorJohn Messina - Research AssociateMatt VanVliet - Managing Director of Equity ResearchRyan Glenn - CFOSamad Samana - Managing DirectorScott Berg - Managing DirectorSean McMahon - Equity Research AssociateSiti Panigrahi - Managing DirectorSteve Beaucham ...

Paylocity (NasdaqGS:PCTY) Q2 2026 Earnings call February 05, 2026 05:00 PM ET Company ParticipantsAustin Cole - Equity Research AssociateBrad Reback - Managing DirectorDaniel Jester - Managing Director of Software ResearchJared Levine - Equity Research DirectorJohn Messina - Research AssociateMatt VanVliet - Managing Director of Equity ResearchRyan Glenn - CFOSamad Samana - Managing DirectorScott Berg - Managing DirectorSean McMahon - Equity Research AssociateSiti Panigrahi - Managing DirectorSteve Beaucham ...

Paylocity (NasdaqGS:PCTY) Q2 2026 Earnings call February 05, 2026 05:00 PM ET Speaker8day and thank you for standing by. Welcome to Paylocity Holding Corporation second quarter fiscal 2026 financial results conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raise ...

This presentation contains statistical data that we obtained from industry publications and reports generated by third parties. Although we believe that the publications and reports are reliable, we have not independently verified this statistical data. Q2 Fiscal 2026 Investor Presentation Safe Harbor Statement This presentation is for informational purposes only and is not an offer to sell securities or a solicitation of an offer to buy any securities, and may not be relied upon in connection with the purc ...