Paylocity Holding(PCTY) - 2025 Q4 - Annual Results

Press Release Overview 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] - Growth was driven by continued expansion of average revenue per client and a 7% increase in the client base[2] - Launched 'Paylocity for Finance,' expanding the modern workforce platform into the Office of the CFO to unify finance and HR teams[2] - Returned capital to shareholders by repurchasing $150 million (approximately 800,000 shares) of stock during FY25[2] 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] - Increased share repurchase authorization by $500 million[5] - 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] Financial Performance 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 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 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 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 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 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 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 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 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 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 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] Business Outlook 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 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] Company Information 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] - Live audio webcast and replay available through https://investors.paylocity.com/events-and-presentations[19](index=19&type=chunk) 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] - Founded in 1997 and publicly traded since 2014, headquartered in Schaumburg, IL[20] - Offers an intuitive, easy-to-use product suite that helps businesses with automation, data-driven insights, and engagement to create great workplaces[20] Supplemental Information 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 - Non-GAAP financial measures are used as important supplemental measures for planning, performance analysis, budgeting, and evaluating financial and operational performance[22] - 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][39][41][43][44][45][46] 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 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] - 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] - Paylocity disclaims any obligation to update or alter these forward-looking statements in the future, unless legally required[23] Consolidated Financial Statements 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 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 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) | — |