Paylocity (PCTY) Q2 Earnings and Revenues Surpass Estimates
Paylocity Holding Corporation PCTY reported second-quarter fiscal 2024 non-GAAP earnings of $1.49 per share, outpacing the Zacks Consensus Estimate by 23.14%. The bottom line improved 1.8%, driven by higher revenues and an increase in the gross and operating margins.
Paylocity’s revenues increased 20% year over year to $326.4 million and surpassed the Zacks Consensus Estimate by 0.62%. The robust increase in the top line was mainly driven by a continued focus on scaling operational costs while maintaining industry-leading service levels.
The top-line growth can be attributed to a 16.4% increase in Recurring revenues (91.4% of the total revenues), which totaled $298.4 million. Moreover, the Interest Income on Funds Held for Clients (8.6% of total revenues) increased 68.6% year over year to $27.9 million.
Paylocity Holding Corporation Price, Consensus and EPS Surprise
Paylocity Holding Corporation price-consensus-eps-surprise-chart | Paylocity Holding Corporation Quote
Quarterly Details
Paylocity’s adjusted gross profit was $237.1 million, up 20% year over year. The adjusted gross margin expanded 30 basis points (bps) year over year to 72.7%.
The non-GAAP operating income increased 42.5% year over year to $92.7 million. The non-GAAP operating margin expanded 460 bps to 28.4%.
Adjusted EBITDA jumped 45.6% from the year-ago quarter to $112.6 million. The adjusted EBITDA margin of 34.5% expanded 620 bps.
Balance Sheet & Other Details
Paylocity exited the fiscal second quarter of 2024 with cash and cash equivalents of $366.9 million compared with the previous quarter’s $305 million. As of Dec 31, 2023, Paylocity had no long-term debt and it had not drawn on its credit facility.
During second-quarter fiscal 2024, Paylocity generated an operating cash flow of $78.7 million and a free cash flow of $52.3 million.
Third-Quarter and Fiscal 2024 Guidance
For the third quarter of fiscal 2024, PCTY expects revenues in the band of $395-$399 million, indicating approximately 17% growth from the year-ago period. Adjusted EBITDA is projected in the band of $153.5-$156.5 million.
For fiscal 2024, the company projects revenues between $1.384 billion and $1.389 billion, representing approximately 18% growth over fiscal 2023. Adjusted EBITDA is expected in the band of $474-$478 million.
Zacks Rank & Stocks to Consider
Currently, Paylocity carries a Zacks Rank #4 (Sell). Shares of PCTY have gained 4.3% year to date.
Some better-ranked stocks from the broader Computer and Technology sector are BlackLine BL, Arista Networks ANET and Badger Meter BMI. While BlackLine and Arista Networks sport a Zacks Rank #1 (Strong Buy) each, Badger Meter carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of BlackLine have lost 3.5% in the year-to-date period. The long-term earnings growth rate for BL is currently projected at 50.56%.
Shares of Arista Networks have gained 13.7% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 20.15%.
Shares of Badger Meter have lost 7.3% in the year-to-date period. The long-term earnings growth rate for BMI is currently projected at 12.27%.
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