Paylocity Holding(US:PCTY)2023-05-05 14:01Financial Performance - Total revenues increased from $246.0 million for the three months ended March 31, 2022, to $339.9 million for the same period in 2023, representing a 38% year-over-year increase [85]. - Total revenues for the nine months ended March 31, 2023, reached $866.1 million, up from $623.7 million for the same period in 2022, marking a 39% year-over-year increase [86]. - Adjusted Gross Profit for the three months ended March 31, 2023, was $258.3 million, compared to $179.8 million for the same period in 2022, reflecting a 44% increase [91]. - Adjusted EBITDA for the three months ended March 31, 2023, was $130.7 million, up from $85.7 million for the same period in 2022, indicating a 52% increase [92]. - Net income for the three months ended March 31, 2023, increased by $22.8 million, or 65%, to $57.6 million from $34.8 million for the same period in 2022 [108]. - Gross profit margin improved from 69% for the three months ended March 31, 2022, to 72% for the same period in 2023 [115]. - Gross margin improved from 66% to 69% for the nine months ended March 31, 2023, driven by total revenue growth and improved operating leverage [126]. Revenue Composition - Recurring revenue accounted for 92% of total revenues for the three months ended March 31, 2023, compared to 100% for the same period in 2022 [95]. - Recurring and other revenue for the three months ended March 31, 2023, increased by $69.2 million, or 28%, to $314.2 million from $245.0 million for the same period in 2022 [112]. - Interest income on funds held for clients for the three months ended March 31, 2023, increased by $24.7 million, or 2,448%, to $25.7 million from $1.0 million for the same period in 2022 [113]. Expenses and Investments - Sales and marketing expenses are anticipated to increase in absolute dollars as the company expands its sales organization and marketing activities [101]. - Research and development expenses for the three months ended March 31, 2023, increased by $16.7 million, or 65%, to $42.3 million from $25.7 million for the same period in 2022 [117]. - Sales and marketing expenses for the three months ended March 31, 2023, increased by $21.3 million, or 40%, to $74.1 million from $52.8 million for the same period in 2022 [116]. - General and administrative expenses for the three months ended March 31, 2023, increased by $2.7 million, or 6%, to $47.4 million from $44.6 million for the same period in 2022 [119]. - Total operating expenses for the three months ended March 31, 2023, increased by $40.7 million, or 33%, to $163.8 million from $123.1 million for the same period in 2022 [108]. Cash Flow and Capital Structure - Net cash provided by operating activities was $206.1 million for the nine months ended March 31, 2023, up from $105.4 million in the same period of 2022 [143]. - Net cash used in investing activities increased to $298.8 million for the nine months ended March 31, 2023, compared to $281.4 million for the same period in 2022 [144]. - The company had $233.7 million in cash and cash equivalents as of March 31, 2023, with no amounts drawn on its revolving credit facility [136]. - 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 March 31, 2023 [156]. - Capital expenditures were $8.8 million for the nine months ended March 31, 2023, down from $15.4 million for the same period in 2022 [148]. Tax and Regulatory Matters - The effective tax rate increased from 26.0% for the three months ended March 31, 2022, to 29.3% for the same period in 2023 [121]. - The effective tax rate decreased from (16.4)% in 2022 to 2.9% in 2023, primarily due to excess tax benefits from employee stock-based compensation and research and development tax credits [131]. Market Risks and Economic Conditions - The company is exposed to market risks primarily related to interest rates and general economic conditions in the United States [151]. - The company does not believe inflation has materially affected its business, but significant inflationary pressures could harm its financial condition [157]. - An immediate 100-basis point increase in interest rates would decrease the market value of available-for-sale securities by $5.9 million [155]. Internal Controls and Governance - The company’s disclosure controls and procedures were evaluated as effective as of March 31, 2023 [160]. - There were no changes to the internal control over financial reporting that materially affected its effectiveness during the reporting period [161].