Paylocity (PCTY) Q4 Earnings and Revenues Surpass Estimates
Paylocity Holding Corporation PCTY ended fiscal 2023 on a strong note by reporting better-than-expected results for the fourth quarter. The company’s quarterly revenues and earnings marked a significant year-over-year improvement as well.
Paylocity reported fourth-quarter non-GAAP earnings of $1.32 per share, outpacing the Zacks Consensus Estimate of $1.08. The bottom line improved a whopping 65% from the year-ago quarter’s earnings of 80 cents per share, mainly driven by higher revenues and an increase in the gross and operating margins.
Paylocity’s revenues increased 35% year over year to $308.5 million and surpassed the Zacks Consensus Estimate of $301.4 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 24% increase in Recurring revenues (91% of the total revenues), which totaled $282 million. Moreover, the Interest Income on Funds Held for Clients (9% of total revenues) increased to $26.4 million from approximately $2.1 million in the year-ago quarter. Our revenue estimates for Recurring and Interest Income on Funds Held for Clients were pegged at $276.8 million and $23 million, respectively.
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 $226.3 million, up 38.9% year over year. The adjusted gross margin expanded 220 basis points (bps) year over year to 73.4%.
The non-GAAP operating income increased to $84 million from the $48.4 million reported in the year-ago period. The non-GAAP operating margin expanded 610 bps to 27.2%.
Adjusted EBITDA increased 69.4% from the year-ago quarter to $100.6 million. The adjusted EBITDA margin of 32.6% expanded 670 bps.
Balance Sheet & Other Details
Paylocity exited the fiscal fourth quarter with cash and cash equivalents of $288.8 million compared with the previous quarter’s $233.7 million. As of Jun 30, 2023, the company had long-term debt (long-term operating lease liabilities plus other long-term liabilities) of $66.2 million.
During fiscal 2023, Paylocity generated operating cash flow of $282.7 million and free cash flow of $215.8 million.
First-Quarter and Fiscal 2024 Guidance
For the first quarter of fiscal 2024, PCTY expects revenues in the band of $314.1-$318.1 million, indicating approximately 25% growth from the year-ago period. Adjusted EBITDA is projected in the band of $89.5-$92.5 million.
For fiscal 2024, the company projects revenues between $1.405 and $1.410 billion, representing approximately 20% growth over fiscal 2023. Adjusted EBITDA is expected in the band of $464-$468 million.
Zacks Rank & Stocks to Consider
Currently, Paylocity carries a Zacks Rank #3 (Hold). Shares of PCTY have increased 9.5% year to date (YTD).
Some better-ranked stocks from the broader technology sector are NVIDIA NVDA, Fortinet FTNT and Salesforce CRM. NVIDIA sports a Zacks Rank #1 (Strong Buy), while Fortinet and Salesforce each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA's second-quarter fiscal 2024 earnings has been revised upward by a couple of cents to $2.06 per share in the past 30 days. For fiscal 2024, earnings estimates have increased by 13 cents to $7.79 per share in the past 30 days.
NVIDIA’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 0.3%. Shares of NVDA have surged 204.6% YTD.
The Zacks Consensus Estimate for Fortinet’s third-quarter 2023 earnings has remained unchanged at 36 cents per share in the past 60 days. For 2023, earnings estimates have remained unchanged at $1.46 per share in the past 60 days.
Fortinet’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 17.1%. Shares of FTNT have rallied 54.9% YTD.
The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has been revised upward by a penny to $1.90 per share in the past 60 days. For fiscal 2024, earnings estimates have moved upward by a couple of cents to $7.44 per share in the past 60 days.
Salesforce's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.5%. Shares of CRM have surged 63.2% YTD.
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