Paylocity reported strong financial results for Q2 FY2025, with total revenue reaching $377.0 million, a 16% YoY increase. Recurring & other revenue grew 17% YoY to $347.7 million, driven by strong sales and product innovation. GAAP operating income stood at $46.6 million, while non-GAAP operating income reached $101.1 million. Net income was $37.5 million ($0.66 per share), slightly lower than last year's $38.1 million ($0.67 per share). Adjusted EBITDA rose 12% to $126.2 million. The company increased its revenue per client through the launch of Benefits Decision Support and Headcount Planning, reaching its $600 max PEPY target set in August 2023.

For Q3 FY2025, Paylocity expects total revenue between $439.0M–$444.0M (10% YoY growth) and adjusted EBITDA between $171M–$175M. FY2025 full-year guidance projects total revenue between $1.558B–$1.568B (11% YoY growth). The company maintains a strong balance sheet, with $482.4 million in cash and $325 million in long-term debt linked to its recent Airbase acquisition.

• Q2 2025 Recurring & Other Revenue of $347.7 million, up 17% year-over-year


• Q2 2025 Total Revenue of $377.0 million, up 16% year-over-year

SCHAUMBURG, Ill., Feb. 06, 2025 - Paylocity Holding Corporation (Nasdaq: PCTY), a leading provider of cloud-based HR, payroll, and spend management software solutions, today announced financial results for the second quarter of fiscal year 2025, which ended December 31, 2024.

“The momentum we saw in Q1 continued into the second quarter of fiscal 25, resulting in very strong results, solid selling season performance, and increased revenue and profitability guidance for fiscal 25. Second quarter recurring & other revenue growth was 17%, primarily driven by strong sales and operational execution, continued product differentiation, and a stable macroeconomic environment. Our sustained investment in R&D continues to drive differentiation and expanded average revenue per client, with the recent launch of Benefits Decision Support and Headcount Planning increasing our max PEPY to $600, achieving the target we set in August 2023. I would also like to thank all of our Paylocity teams as they support our clients through our busiest time of year,” said Toby Williams, President and Chief Executive Officer of Paylocity.

Second Quarter Fiscal 2025 Financial Highlights

Revenue:

• Total revenue was $377.0 million, an increase of 16% from the second quarter of fiscal year 2024.


• Recurring & other revenue was $347.7 million, an increase of 17% from the second quarter of fiscal year 2024.

Operating Income:

• GAAP operating income was $46.6 million and non-GAAP operating income was $101.1 million in the second quarter of fiscal year 2025 compared to GAAP operating income of $49.7 million and non-GAAP operating income of $92.8 million in the second quarter of fiscal year 2024.

Net Income:

• GAAP net income was $37.5 million or $0.66 per share in the second quarter of fiscal year 2025 based on 56.7 million diluted weighted average common shares outstanding compared to $38.1 million or $0.67 per share in the second quarter of fiscal year 2024 based on 56.9 million diluted weighted average common shares outstanding.

Adjusted EBITDA:

• Adjusted EBITDA, a non-GAAP measure, was $126.2 million in the second quarter of fiscal year 2025 compared to $112.6 million in the second quarter of fiscal year 2024.


• Adjusted EBITDA excluding interest income on funds held for clients, a non-GAAP measure, was $96.9 million in the second quarter of fiscal year 2025 as compared to $84.7 million in the second quarter of fiscal year 2024.

Balance Sheet and Cash Flow:

• Cash and cash equivalents totaled $482.4 million as of December 31, 2024.


• Long-term debt totaled $325.0 million as of December 31, 2024, representing borrowings under our credit facility to fund the acquisition of Airbase on October 1, 2024.


• Cash flow from operations for the first six months of fiscal year 2025 was $145.7 million compared to $137.2 million for the first six months of fiscal year 2024.

A reconciliation of GAAP to non-GAAP financial measures has been provided in this press release in the accompanying tables. Additional information regarding these measures can be found below under the headings “Non-GAAP Financial Measures” and “Definitions of our Non-GAAP Measures.”

Business Outlook

Based on information available as of February 6, 2025, Paylocity is issuing guidance for the third quarter and full fiscal year 2025 as indicated below.

Third Quarter 2025:

• Recurring and other revenue is expected to be in the range of $410.0 million to $415.0 million, which represents approximately 12% growth over fiscal year 2024 third quarter recurring and other revenue.


• Total revenue is expected to be in the range of $439.0 million to $444.0 million, which represents approximately 10% growth over fiscal year 2024 third quarter total revenue.


• Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $171.0 million to $175.0 million.


• Adjusted EBITDA excluding interest income on funds held for clients, a non-GAAP measure, is expected to be in the range of $142.0 million to $146.0 million.

Fiscal Year 2025:

• Recurring and other revenue is expected to be in the range of $1.445 billion to $1.455 billion, which represents approximately 13% growth over fiscal year 2024 recurring and other revenue.


• Total revenue is expected to be in the range of $1.558 billion to $1.568 billion, which represents approximately 11% growth over fiscal year 2024 total revenue.


• Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $542.0 million to $550.0 million.


• Adjusted EBITDA excluding interest income on funds held for clients, a non-GAAP measure, is expected to be in the range of $429.0 million to $437.0 million.

We are unable to reconcile the forward-looking non-GAAP measures set forth above to their directly comparable GAAP financial measures because the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort.

Conference Call Details

Paylocity will host a conference call to discuss its second quarter fiscal year 2025 results at 4:30 p.m. Central Time today (5:30 p.m. Eastern Time). A live audio webcast of the conference call along with detailed financial information can be accessed through https://investors.paylocity.com/events-and-presentations where dial in details are provided. A replay of the call will be available and archived via webcast at https://investors.paylocity.com/.

About Paylocity

Paylocity is a leading provider of cloud-based HR, payroll, and spend management software solutions headquartered in Schaumburg, IL. Founded in 1997 and publicly traded since 2014, Paylocity offers an intuitive, easy-to-use product suite that helps businesses tackle today’s challenges while moving them toward the promise of tomorrow. Known for its unique culture and consistently recognized as one of the best places to work, Paylocity accompanies its clients on the journey to create great workplaces and help people achieve their best through automation, data-driven insights, and engagement. For more information, visit www.paylocity.com.

Non-GAAP Financial Measures
The company uses certain non-GAAP financial measures when reporting and discussing its financial results, including the financial measures in this release that are designated as being “non-GAAP.” Management presents certain non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance. Management uses non-GAAP financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. Non-GAAP financial measures have limitations as an analytical tool and other companies may define their non-GAAP financial measures differently than we do. Investors are encouraged to review the reconciliation of the non-GAAP measures to their most directly comparable GAAP measures provided in the accompanying tables to this release, as well as the definitions of those non-GAAP measures following such tables.

Safe Harbor/Forward Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included herein regarding Paylocity’s future operations, future financial position and performance, anticipated results of operations, prospects, plans and objectives of management are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “seek” and similar expressions (or the negative of these terms) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include statements about management's estimates regarding future revenues and financial performance, and other statements about management’s beliefs, intentions or goals and are expressed in good faith and believed to be reasonable at the time such statements are made. Paylocity may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on such statements. These forward-looking statements involve risks and uncertainties, many of which are beyond Paylocity’s control, that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements. Factors that could cause actual results or events to differ materially from what is presented include, but are not limited to, the general economic conditions in regions in which Paylocity does business, changes in interest rates, business disruptions, reductions in employment and increases in business failures that have occurred or may occur in the future; Paylocity’s ability to leverage AI Assist and other forms of artificial intelligence and machine learning in its technology, which may be constrained by current and future laws, regulations, interpretive positions or standards governing new and evolving technologies and ethical considerations that could restrict or impose burdensome and costly requirements on its ability to continue to leverage data in innovative ways; Paylocity’s ability to retain existing clients and to attract new clients to enter into subscriptions for its services; the challenges associated with a growing company’s ability to effectively service clients in a dynamic and competitive market; challenges associated with expanding and evolving a sales organization to effectively address new geographies and products and services; challenges related to cybersecurity threats and evolving cybersecurity regulations; Paylocity’s reliance on and ability to expand its referral network of third parties; Paylocity’s reliance on third party payroll partners in foreign jurisdictions in its Blue Marble business; difficulties associated with accurately forecasting revenue and appropriately planning expenses; challenges with managing growth effectively; risks related to acquisitions and investments in other businesses and technologies; risks related to regulatory, legislative and judicial uncertainty in Paylocity’s markets; Paylocity’s ability to protect and defend its intellectual property and its use of open source software in its products; the risk that Paylocity’s security measures are compromised or a threat actor gains unauthorized access to customer data; unexpected events in the market for Paylocity’s solutions; changes in the competitive environment in Paylocity’s industry and the markets in which it operates; adverse changes in general economic or market conditions; changes in the employment rates of Paylocity’s clients and the resultant impact on revenue; the possibility that Paylocity may be adversely affected by other economic, business, and/or competitive factors; and other risks and potential factors that could affect Paylocity’s business and financial results that are identified in Paylocity’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on August 2, 2024, as well as any revisions or supplements to the information in subsequent reports filed or furnished to the SEC. These forward-looking statements represent Paylocity’s expectations as of the date of this press release. Subsequent events may cause these expectations to change, and unless legally required, Paylocity disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.