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1. Company Snapshot

1.a. Company Description

Paylocity Holding Corporation provides cloud-based human capital management and payroll software solutions for workforce in the United States.The company offers Payroll and Tax Services solution to simplifies payroll, automates processes, and manages compliance requirements within one system; and expense management, on demand payment, and garnishment solutions.It also provides human capital management and employee self-service solutions, document library, compliance dashboard, and HR edge; time and attendance solution; schedule tracking services; and time collection devices, including kiosks, time clocks, and mobile and web applications.


In addition, the company offers talent management solutions comprising recruiting and onboarding, as well as learning, performance, and compensation management; employee benefits management and third-party administrative solutions; employee experiences solutions, including community, premium video, survey, and peer recognition; and insights and recommendations solutions, such as modern workforce index, data insights, and reporting.Further, it provides implementation and training, client, and tax and regulatory services.The company serves for-profit and non-profit organizations across industries, including business services, financial services, healthcare, manufacturing, restaurants, retail, technology, and others.


It sells its products through sales representatives.The company was founded in 1997 and is headquartered in Schaumburg, Illinois.

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1.b. Last Insights on PCTY

Paylocity Holding Corporation faced negative drivers, including decreased stakes from institutional investors such as Fisher Asset Management LLC, which cut its stake by 92.3%. Additionally, Skandinaviska Enskilda Banken AB publ decreased its stake by 25.6%. However, the company received a consensus recommendation of "Moderate Buy" from 22 research firms. Paylocity's Q2 2026 earnings beat estimates, with recurring revenue growth of 10.4% YoY and expanding profitability. The company's integration of Airbase and AI-driven enhancements are driving cross-sell opportunities. Hillsdale Investment Management Inc. made a new investment in the company.

1.c. Company Highlights

2. Paylocity's Q2 Results Exceed Expectations

Paylocity Holding Corporation reported total revenue of $416.1 million, a 10% growth over Q2 2025, and recurring and other revenue of $387 million, an 11% increase. The company's adjusted gross profit was 74.4% for Q2, versus 73.8% in Q2 of last fiscal year. Earnings per share (EPS) came in at $1.85, beating analyst estimates of $1.57. The strong financial performance was driven by solid sales and operational performance, as well as the company's continued investment in research and development, particularly in AI capabilities.

Publication Date: Feb -08

📋 Highlights
  • Revenue Growth:: Total revenue reached $416.1 million (10% YoY), with recurring and other revenue at $387 million (11% YoY).
  • AI Adoption Surge:: Average monthly usage of the AI assistant increased over 100% quarter-over-quarter.
  • Share Repurchases:: $100 million in Q2 share buybacks, totaling over 1.8 million shares repurchased YTD, with $400 million remaining in the program.
  • 2026 Guidance Raised:: Recurring revenue guidance now $1.62–1.63 billion (10–11% growth), total revenue $1.732–1.742 billion (9% growth).
  • Broker Channel Impact:: Over 25% of new business in Q2 stemmed from referrals, driven by strong sales execution and client satisfaction.

Revenue Growth Drivers

The company's multiyear investment in R&D has led to the development of new functionality, such as video candidate screening and self-service scheduling, which has helped clients improve their hiring process and drive automation and efficiency. Additionally, Paylocity's expanded AI capabilities, including the release of its policy and procedures agent, have contributed to its strong financial results, with average monthly usage of its AI assistant increasing over 100% quarter over quarter. As Toby Williams, President and CEO, mentioned, "the momentum seen in Q1 continued into the second quarter, contributing to a strong selling season performance and increased revenue and profitability guidance for fiscal 2026."

Valuation Metrics

With a P/E Ratio of 26.98 and an EV/EBITDA of 14.38, the market is pricing in a certain level of growth for Paylocity. Analysts estimate revenue growth of 8.1% for next year, which is lower than the current year's growth rate. The company's ROE of 20.52% and ROIC of 3.5% indicate a strong ability to generate returns on equity, but a relatively low return on invested capital. The P/S Ratio of 3.82 suggests that the stock is trading at a premium to its sales.

Guidance and Outlook

Paylocity increased its guidance for fiscal 2026, with recurring and other revenue expected to be in the range of $1.62 billion to $1.63 billion, or approximately 10% to 11% growth over fiscal 2025. Total revenue guidance is now expected to be in the range of $1.732 billion to $1.742 billion, or approximately 9% growth over fiscal 2025. The company's strong execution and stable demand environment are expected to continue, with a focus on driving innovation and client satisfaction.

Share Repurchase and Capital Allocation

The company repurchased approximately $100 million in shares of its common stock in Q2, bringing the total repurchased shares to over 1.8 million for the fiscal year to date. With approximately $400 million remaining under its share repurchase program, Paylocity is demonstrating its commitment to returning value to shareholders. The company's free cash flow yield of 6.93% suggests that it has a strong ability to generate cash and return it to shareholders.

3. NewsRoom

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Comparing Kingdee International Software Group (OTCMKTS:KGDEY) & Paylocity (NASDAQ:PCTY)

Mar -06

Source: defenseworld.net

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Paylocity Named a Top HR System in Sapient Insights Group's 28th Annual HR Systems Survey Report

Feb -26

Source: globenewswire.com

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Paylocity Holding Corporation $PCTY is Fox Run Management L.L.C.’s 6th Largest Position

Feb -25

Source: defenseworld.net

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Hillsdale Investment Management Inc. Makes New Investment in Paylocity Holding Corporation $PCTY

Feb -23

Source: defenseworld.net

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Skandinaviska Enskilda Banken AB publ Sells 50,532 Shares of Paylocity Holding Corporation $PCTY

Feb -18

Source: defenseworld.net

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Paylocity Holding Corporation (NASDAQ:PCTY) Receives Consensus Recommendation of “Moderate Buy” from Brokerages

Feb -13

Source: defenseworld.net

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3 HCM Stocks to Consider After January's Strong U.S. Jobs Report

Feb -11

Source: zacks.com

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Paylocity: Appears Undervalued With Decent Rebound Potential

Feb -10

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.47%)

6. Segments

Cloud-based Human Capital Management and Payroll Software Solution

Expected Growth: 10.55%

Paylocity's cloud-based HCM and payroll software solution growth is driven by increasing adoption of digital HR solutions, rising demand for automated payroll processing, and growing need for data-driven workforce insights. Additionally, the shift towards remote work and the requirement for seamless employee experience are contributing to the 10.55% growth.

Interest Income on Funds Held for Clients

Expected Growth: 9.27%

The 9.27% growth in Interest Income on Funds Held for Clients from Paylocity Holding Corporation is driven by increasing client adoption of its treasury management services, expansion of its client base, and rising interest rates. Additionally, the company's strategic partnerships and investments in digital platforms have enhanced its ability to attract and retain clients, resulting in higher interest income.

7. Detailed Products

Core HR

A comprehensive human capital management (HCM) platform that provides a single, unified solution for managing HR, payroll, and benefits administration.

Payroll

A cloud-based payroll processing solution that provides accurate and timely payroll processing, tax compliance, and reporting.

Time and Attendance

A time-tracking and attendance management solution that provides real-time visibility into employee work hours, absences, and leave.

Talent Management

A suite of tools for recruiting, onboarding, performance management, and learning management.

Benefits Administration

A benefits administration solution that provides online enrollment, benefits education, and compliance management.

Workforce Analytics

A data analytics platform that provides insights into workforce trends, productivity, and performance.

Mobile Access

A mobile app that provides employees with secure, on-the-go access to HR, payroll, and benefits information.

8. Paylocity Holding Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Paylocity Holding Corporation's services are specialized and tailored to specific industries, making it difficult for substitutes to emerge. However, the company still faces competition from other HR and payroll software providers.

Bargaining Power Of Customers

Paylocity Holding Corporation's customers are largely small to medium-sized businesses, which have limited bargaining power. The company's services are also highly customized, making it difficult for customers to switch to alternative providers.

Bargaining Power Of Suppliers

Paylocity Holding Corporation has a diversified supplier base, and its suppliers have limited bargaining power. The company's suppliers are primarily technology and infrastructure providers, which are readily available and interchangeable.

Threat Of New Entrants

While there are barriers to entry in the HR and payroll software market, new entrants can still emerge. However, Paylocity Holding Corporation's established brand and customer base provide a competitive advantage.

Intensity Of Rivalry

The HR and payroll software market is highly competitive, with several established players competing for market share. Paylocity Holding Corporation faces intense competition from companies like ADP, Workday, and BambooHR.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 7.70%
Debt Cost 3.95%
Equity Weight 92.30%
Equity Cost 8.34%
WACC 8.00%
Leverage 8.34%

11. Quality Control: Paylocity Holding Corporation passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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AppFolio

A-Score: 4.7/10

Value: 0.8

Growth: 9.7

Quality: 8.9

Yield: 0.0

Momentum: 4.0

Volatility: 5.0

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Paylocity

A-Score: 4.7/10

Value: 2.0

Growth: 9.2

Quality: 8.0

Yield: 0.0

Momentum: 1.5

Volatility: 7.3

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Value: 1.9

Growth: 9.9

Quality: 9.0

Yield: 0.0

Momentum: 4.5

Volatility: 2.0

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Lyft

A-Score: 4.5/10

Value: 3.4

Growth: 7.4

Quality: 5.5

Yield: 0.0

Momentum: 8.0

Volatility: 2.7

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Guidewire Software

A-Score: 4.4/10

Value: 0.0

Growth: 8.3

Quality: 5.8

Yield: 0.0

Momentum: 7.0

Volatility: 5.3

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Clearwater Analytics

A-Score: 4.0/10

Value: 1.8

Growth: 8.7

Quality: 6.7

Yield: 0.0

Momentum: 1.5

Volatility: 5.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

120.1$

Current Price

120.1$

Potential

-0.00%

Expected Cash-Flows