Paylocity Holding(US:PCTY)2023-02-03 15:02Revenue Growth - Total revenues increased from $196.0 million for the three months ended December 31, 2021 to $273.0 million for the three months ended December 31, 2022, representing a 39% year-over-year increase[85]. - Total revenues for the three months ended December 31, 2022, increased by $76.9 million, or 39%, to $273.0 million from $196.0 million for the same period in 2021[108]. - Recurring and other revenue accounted for 99% and 94% of total revenues for the three months ended December 31, 2021 and 2022, respectively[95]. - Recurring and other revenue for the three months ended December 31, 2022, increased by $61.4 million, or 31%, to $256.4 million from $195.0 million for the same period in 2021[112]. Profitability - Adjusted Gross Profit for the three months ended December 31, 2022 was $197.6 million, up from $134.7 million in the same period of 2021, reflecting a 47% increase[91]. - Adjusted EBITDA for the three months ended December 31, 2022 was $77.4 million, compared to $46.6 million for the same period in 2021, marking a 66% increase[92]. - Operating income for the three months ended December 31, 2022, increased by $10.1 million, or 124%, to $18.2 million from $8.1 million for the same period in 2021[108]. - Net income for the three months ended December 31, 2022, was $15.6 million, compared to $9.9 million for the same period in 2021[108]. - Gross profit margin improved to 67% for the three months ended December 31, 2022, compared to 64% for the same period in 2021[114]. Expenses - Cost of revenues for the three months ended December 31, 2022, increased by $19.3 million, or 27%, to $90.1 million from $70.8 million for the same period in 2021[115]. - Research and development expenses for the three months ended December 31, 2022, increased by $15.8 million, or 62%, to $41.0 million from $25.3 million for the same period in 2021[117]. - General and administrative expenses for the three months ended December 31, 2022, increased by $8.4 million, or 21%, to $48.0 million from $39.6 million for the same period in 2021[119]. - Sales and marketing expenses are expected to increase as the company expands its sales organization and marketing activities to grow its client base[101]. - Sales and marketing expenses rose by $44.7 million, or 44%, to $146.8 million for the six months ended December 31, 2022, driven by $27.8 million in additional employee-related costs[128]. - Research and development expenses increased by $32.8 million, or 68%, to $81.1 million for the six months ended December 31, 2022, primarily due to $21.8 million in additional employee-related costs[129]. - General and administrative expenses grew by $23.7 million, or 32%, to $98.5 million for the six months ended December 31, 2022, mainly due to $13.7 million in additional stock-based compensation costs[130]. Cash Flow and Financial Position - Net cash provided by operating activities was $78.8 million for the six months ended December 31, 2022, compared to $26.9 million for the same period in 2021[146]. - Net cash used in investing activities decreased to $132.2 million for the six months ended December 31, 2022, from $218.3 million in the same period of 2021[147]. - Net cash provided by (used in) financing activities was $(993.9) million for the six months ended December 31, 2022, a significant decrease from $100.4 million in the same period of 2021[149]. - As of December 31, 2022, the company had $120.1 million in cash and cash equivalents and an amended credit facility with a borrowing capacity of up to $825.0 million[139]. - As of December 31, 2022, the company had cash and cash equivalents of $120.1 million and funds held for clients amounting to $3,065.7 million[156]. - The company has a revolving credit facility of $550.0 million, which can be increased to $825.0 million, with no amounts drawn as of December 31, 2022[159]. Interest Income - Interest income on funds held for clients is generated through demand deposit accounts and investments in highly liquid, investment-grade marketable securities[97]. - Interest income on funds held for clients for the three months ended December 31, 2022, increased by $15.6 million, or 1,564%, to $16.6 million from $1.0 million for the same period in 2021[113]. Taxation - The effective tax rate for the three months ended December 31, 2022, was 14.3%, compared to (26.9)% for the same period in 2021[122]. - The effective tax rate was (82.9)% for the six months ended December 31, 2022, lower than the federal statutory rate of 21% due to excess tax benefits from employee stock-based compensation[133]. Market and Economic Conditions - The company does not believe inflation has materially affected its business, but acknowledges potential risks if costs rise significantly[160]. - An immediate 100-basis point increase in interest rates would decrease the market value of available-for-sale securities by $4.1 million, while a decrease would increase it by the same amount[158]. Internal Controls and Governance - The company has evaluated its disclosure controls and procedures and concluded they were effective as of December 31, 2022[162]. - There were no changes to the internal control over financial reporting during the three-month period that materially affected it[163].