Paylocity (PCTY) Q3 Earnings and Revenues Surpass Estimates
Paylocity Holding Corporation PCTY reported overwhelming third-quarter fiscal 2023 results, wherein revenues and earnings beat the respective Zacks Consensus Estimate and marked a strong year-over-year improvement.
Paylocity reported third-quarter non-GAAP earnings of $1.74 per share, outpacing the Zacks Consensus Estimate of $1.50. The bottom line improved a whopping 42.6% from the year-ago quarter’s earnings of $1.22 per share, mainly driven by higher revenues and an increase in the gross and operating margins.
Paylocity’s revenues increased 38% year over year to $339.9 million and surpassed the Zacks Consensus Estimate of $332.8 million. The robust increase in the top line was mainly driven by better sales execution and sustained investments in technological upgrades and product innovation.
The top-line growth can be attributed to a 28% increase in recurring revenues (92% of the total revenues), which totaled $314.2 million. Moreover, the interest income on funds held for clients increased to $25.7 million from approximately $1 million in the year-ago quarter.
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 $258.3 million, up 43.7% year over year. The adjusted gross margin expanded 290 basis points (bps) year over year to 76%.
The non-GAAP operating income increased to $116.7 million from the $75.5 million reported in the year-ago period. The non-GAAP operating margin expanded 360 bps to 34.3%.
Adjusted EBITDA increased 52.4% from the year-ago quarter to $130.7 million. The adjusted EBITDA margin of 38.4% expanded 360 bps.
Balance Sheet & Other Details
Paylocity exited the fiscal third quarter with cash and cash equivalents of $233.7 million compared with the previous quarter’s $120.1 million. As of Mar 31, 2023, the company had long-term debt (long-term operating lease liabilities plus other long-term liabilities) of $67.9 million.
During the first nine months of fiscal 2023, Paylocity generated operating cash flow of $206.1 million and free cash flow of $166.6 million.
Raised FY23 Guidance
Buoyed by the stronger-than-expected third-quarter performance, Paylocity raised its guidance for fiscal 2023. The company now projects revenues between $1.165 and $1.169 billion in fiscal 2023, up from the earlier guidance range of $1.156-$1.161 billion. Adjusted EBITDA is now expected in the band of $368.1-$371.1 million instead of the previously guided range of $358.5-$362.5 million.
For the fourth quarter of fiscal 2023, PCTY expects revenues in the band of $299.2-$303.2 million, indicating approximately 32% growth from the year-ago period. Adjusted EBITDA is projected in the band of $93.5-$96.5 million.
Zacks Rank & Stocks to Consider
Currently, Paylocity carries a Zacks Rank #3 (Hold). Shares of PCTY have plunged 8.5% over the past year.
Some better-ranked stocks from the broader technology sector are Wix.com WIX, Zscaler ZS and Check Point Software CHKP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Wix.com’s first-quarter 2023 earnings has been revised upward to 23 cents per share from 16 cents per share 60 days ago. For 2023, earnings estimates have been revised northward by 7 cents to $1.49 per share in the past 60 days.
Wix.com's earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, the average surprise being 225%. Shares of WIX have declined 2% YTD.
The Zacks Consensus Estimate for Zscaler's third-quarter fiscal 2023 earnings has been revised 2 cents northward to 39 cents per share in the past 60 days. For fiscal 2023, earnings estimates have been revised northward by 8 cents to $1.52 per share in the past 60 days.
Zscaler’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 29.7%. Shares of ZS have declined 21.2% YTD.
The Zacks Consensus Estimate for Check Point Software's second-quarter 2023 earnings has remained unchanged at $1.89 per share for the past 60 days. For 2023, earnings estimates have moved upward by a penny to $7.98 per share in the past seven days.
Check Point Software's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 3.7%. Shares of CHKP have declined 6.1% YTD.
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