Financial Data and Key Metrics Changes - Total revenue for Q1 was $408.2 million, representing a 12% increase year-over-year [6][16] - Recurring and other revenue grew by 14% compared to the same period last year [6][16] - Adjusted gross margin improved to 75.1%, up from 74% in Q1 of the previous year [16] - Adjusted EBITDA for Q1 was $146.4 million, with a margin of 35.9%, exceeding guidance by $11.4 million [18] Business Line Data and Key Metrics Changes - The launch of Paylocity for Finance contributed to strong revenue growth, expanding the platform's capabilities [6][7] - The AI assistant's usage has more than doubled, with over 1.2 million questions answered in the past year [8][11] Market Data and Key Metrics Changes - The company reported stable workforce levels at client companies, consistent with previous quarters [28] - The referral channel contributed over 25% of new business in Q1, indicating strong market demand [10] Company Strategy and Development Direction - The company is focused on expanding its AI capabilities across its platform to enhance user experience and drive product adoption [7][11] - Paylocity aims to leverage its broker-neutral position to strengthen its market presence and client partnerships [10][87] - Long-term financial targets have been increased, with revenue expectations rising from $2 billion to $3 billion [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the demand environment and the ability to continue driving growth [28][58] - The company anticipates a positive impact from recent tax legislation changes, benefiting free cash flow by approximately $65 million in Fiscal 2026 [20][72] Other Important Information - The company repurchased nearly 1.2 million shares for $200 million in Q1, reflecting confidence in its financial position [19] - Paylocity was recognized as a leader in multiple HCM product categories, enhancing its market reputation [9] Q&A Session Summary Question: Update on the macro environment and headcount assumptions - Management noted continued stability in workforce levels and maintained flat workforce assumptions for the fiscal year [28] Question: Long-term guidance and AI benefits - Management indicated that both natural business scale and AI benefits contribute to confidence in long-term growth, though it's still early for AI impacts [29] Question: Insights on the Office of the CFO and Airbase acquisition - Management reported strong early traction for the Finance product and positive feedback from clients [34][36] Question: Impact of Paylocity for Finance on long-term financial targets - Management expressed confidence that the Finance solution will achieve margins similar to the rest of the portfolio [82] Question: Competitive landscape and win rates - Management highlighted a differentiated product portfolio and stable demand environment, with a focus on execution [87]

Financial Data and Key Metrics Changes - Total revenue for Q1 2026 was $408.2 million, representing a 12% increase year-over-year [6][16] - Recurring and other revenue grew by 14% compared to the same period last year [6][16] - Adjusted gross margin improved to 75.1%, up from 74% in Q1 of the previous year [16] - Adjusted EBITDA for Q1 was $146.4 million, with a margin of 35.9%, exceeding guidance by $11.4 million [18] Business Line Data and Key Metrics Changes - The launch of Paylocity for Finance contributed to strong revenue growth, expanding the platform's capabilities into the office of the CFO [6][7] - The AI assistant's usage has more than doubled, with over 1.2 million questions answered, indicating increased product adoption [8][11] Market Data and Key Metrics Changes - The company reported stable demand across its target market, with workforce levels at clients slightly up year-over-year [28][58] - The referral channel contributed over 25% of new business in Q1, demonstrating strong performance in the broker channel [10] Company Strategy and Development Direction - The company is focused on expanding its AI capabilities across its platform to enhance user experience and drive business impact [7][11] - Paylocity aims to leverage its differentiated value proposition to capture a larger share of the HCM market while expanding into finance and IT [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the operating environment and the ability to maintain flat workforce levels throughout the fiscal year [28] - The company raised its fiscal 2026 guidance due to strong Q1 performance and confidence in ongoing growth [24][25] Other Important Information - The company repurchased nearly 1.2 million shares for $200 million in Q1, reflecting confidence in its cash flow and business outlook [19] - The average daily balance of client funds was approximately $2.9 billion in Q1, with expectations to increase to $3 billion in Q2 [21] Q&A Session Summary Question: Update on macro trends and headcount assumptions - Management noted continued stability in workforce levels at clients, with flat assumptions for the fiscal year [28] Question: Long-term guidance and AI benefits - Management indicated that while AI is still in early stages, it provides incremental confidence for multi-year growth [29] Question: Office of the CFO and Airbase acquisition - Management reported strong early traction for the Finance product, with positive feedback from both new and existing clients [34] Question: Impact of Paylocity for Finance on long-term targets - Management expressed confidence that the Finance solution will achieve margins similar to the rest of the portfolio [82] Question: Demand environment across employee segments - Management observed stable demand across all segments, with strong execution from go-to-market teams [58] Question: Sales cycle changes with new product offerings - Management confirmed no elongation in sales cycles, maintaining a focus on efficient go-to-market strategies [78]

Financial Data and Key Metrics Changes - Total revenue for Q1 was $408.2 million, representing a 12% increase year-over-year, with recurring and other revenue growth of 14% [4][13] - Adjusted gross margin improved to 75.1% from 74% in the same quarter last year, reflecting 110 basis points of leverage [13] - Adjusted EBITDA for Q1 was $146.4 million, with a margin of 35.9%, exceeding guidance by $11.4 million [16][23] Business Line Data and Key Metrics Changes - The launch of Paylocity for Finance has expanded the company's offerings, contributing to strong demand across HR, finance, and IT functions [5][10] - The AI assistant's usage has more than doubled in the past year, with over 1.2 million questions answered, indicating increased product adoption [6][9] Market Data and Key Metrics Changes - The company reported strong client retention and a stable demand environment across its target market, with workforce levels at clients slightly up year-over-year [8][49] - The referral channel contributed over 25% of new business in Q1, demonstrating the effectiveness of the broker channel [8] Company Strategy and Development Direction - The company is focused on driving innovation through AI and automation, enhancing user experience and operational efficiency [5][11] - Long-term financial targets have been increased, with revenue targets raised from $2 billion to $3 billion and adjusted gross margin targets increased to over 80% [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the workforce levels and the ability to maintain growth, with a focus on prudent guidance [25] - The company anticipates continued strong performance in Q2 and throughout Fiscal 2026, driven by the success of its AI strategy and product offerings [22][23] Other Important Information - The company repurchased nearly 1.2 million shares for $200 million in Q1, reflecting confidence in its cash flows and business outlook [17] - The average daily balance of client funds was approximately $2.9 billion in Q1, with expectations of $3 billion in Q2 [19] Q&A Session Summary Question: Update on the macro environment and headcount assumptions - Management noted continued stability in workforce levels and maintained flat workforce assumptions for the fiscal year [25] Question: Long-term guidance and drivers of upside - Management indicated that both natural business scale and AI benefits contribute to confidence in long-term growth, though it's still early days for AI [26] Question: Insights on the Office of the CFO and Airbase acquisition - Management reported strong early traction for the Finance product, with positive feedback from clients and prospects [30] Question: Drivers for adjusted EBITDA guidance - Management emphasized a level of prudence in guidance despite strong Q1 performance, with flexibility to make investments as needed [33] Question: Opportunities in IT department offerings - Management highlighted the potential for leveraging employee data for asset and identity management, indicating early positive feedback from clients [36] Question: Demand environment across employee segments - Management observed stable demand across all segments, with strong execution from go-to-market teams [49] Question: Impact of AI on product adoption - Management noted that AI investments are driving broader product adoption and simplifying user experiences, leading to increased value for clients [56] Question: Changes in sales cycle due to new product offerings - Management confirmed that there have been no elongations in sales cycles, maintaining a focus on efficient go-to-market strategies [66]

Core Insights - Paylocity Holding Corporation reported strong financial results for the first quarter of fiscal year 2026, with a 14% growth in recurring and other revenue and a significant increase in profitability, driven by its modern software offerings and AI strategy [2][3][7]. Financial Performance - Recurring and other revenue reached $378.9 million, up 14% year-over-year [7][8]. - Total revenue for the quarter was $408.2 million, reflecting a 12% increase compared to the same period last year [7][8]. - GAAP operating income was $74.2 million, compared to $64.1 million in the first quarter of fiscal year 2025 [3]. - Non-GAAP operating income increased to $121.2 million from $104.9 million year-over-year [3]. - GAAP net income was $48.0 million, or $0.86 per share, down from $49.6 million, or $0.88 per share, in the prior year [4]. Adjusted Metrics - Adjusted EBITDA for the quarter was $146.4 million, up from $129.0 million in the same quarter last year [9]. - Adjusted EBITDA excluding interest income on funds held for clients was $117.1 million, compared to $99.2 million in the prior year [9]. Balance Sheet and Cash Flow - Cash and cash equivalents totaled $165.2 million as of September 30, 2025 [9]. - Long-term debt stood at $81.3 million, with $81.3 million repaid during the quarter [9]. - Net cash provided by operations was $86.5 million, down from $91.5 million in the same quarter last year [10]. Share Repurchase and Financial Targets - The company repurchased $200 million worth of shares in the first quarter, totaling $500 million since May 2024 [7]. - Updated long-term financial targets include total revenue of $3 billion and an adjusted EBITDA margin of 40-45% [7]. Business Outlook - For the second quarter of fiscal year 2026, recurring and other revenue is expected to be between $378.5 million and $383.5 million, indicating approximately 10% growth [15]. - Total revenue guidance for the full fiscal year 2026 is projected to be between $1.715 billion and $1.730 billion, representing about 8% growth [15].

Core Insights - Internet Software companies are anticipated to report strong quarterly results due to ongoing demand for digital transformation, cloud computing, and AI integration across various industries [1][11] - The shift to cloud-based infrastructure has positively impacted the performance of Internet Software stocks, with increased demand for networking, data analytics, cybersecurity, and collaboration tools [2] - AI and machine learning capabilities are enhancing the value of Internet software solutions, as businesses leverage these technologies to improve customer experiences and automate workflows [3] Market Growth - The global software market was valued at $730.70 billion in 2024 and is projected to reach $1,397.31 billion by 2030, with a CAGR of 11.3% from 2025 to 2030, benefiting Internet Software companies [4] Earnings Expectations - Astera Labs expects third-quarter 2025 revenues between $203 million and $210 million, reflecting a year-over-year increase of 6% to 9% [8] - Arista Networks anticipates third-quarter revenues of approximately $2.25 billion, indicating a 24.83% year-over-year growth [12] - Match Group forecasts third-quarter revenues of $910-$920 million, suggesting a 2-3% year-over-year growth [14] - Paylocity Holdings expects first-quarter fiscal 2026 revenues of $397.5-$402.5 million, indicating a 10% growth from the previous year [16] - Pinterest projects third-quarter 2025 revenues in the range of $1.033-$1.053 billion, indicating a 15-17% year-over-year growth [18] Company-Specific Insights - Astera Labs' revenue growth is driven by demand for AI servers and data center infrastructure, with strong performance across its product families [7] - Arista Networks is benefiting from robust demand in AI, cloud, and enterprise sectors, focusing on AI networking and cloud infrastructure upgrades [10] - Match Group's performance is supported by positive foreign exchange impacts and increased marketing spending for its dating platforms [13] - Paylocity's growth is attributed to strong demand for its innovative product portfolio, particularly the integration of finance and HR functions [15] - Pinterest's growth is fueled by user growth among Gen Z and advancements in AI-powered ad tools [17]

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]