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]

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 Insights - Paylocity has launched "Paylocity for Finance," expanding its platform to unify HR and finance through a single system of record [1][7] - The integration of Airbase enhances the platform by automating finance operations and providing real-time visibility and control [2][6] - The new suite includes five core modules aimed at improving spend management and strategic planning [5] Product Features - Paylocity for Finance automates critical business processes, reduces manual work, and utilizes AI-powered solutions to connect HR and finance [3][7] - The platform integrates with major ERP and general ledger systems, enabling faster month-end close and tighter financial control [6] - Key features include AP Automation, Expense Management, Corporate Cards, Guided Procurement, and Headcount Planning [8][9] Market Position - Forrester's report highlights the evolution of HCM platforms, indicating that spend management is now an essential part of the traditional HCM model [4] - Paylocity is recognized for its innovative approach to simplifying work and enhancing user experience, which is expected to drive increased adoption [7][10]