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A month has gone by since the last earnings report for Paylocity (PCTY - Free Report) . Shares have added about 4.6% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Paylocity due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Paylocity Holding Corporation before we dive into how investors and analysts have reacted as of late.
Paylocity Q4 Earnings Beat Estimates, Revenues Increase Y/YPaylocity reported fourth-quarter fiscal 2026 non-GAAP net income of $1.84 per share, which increased 17.9% year over year and beat the Zacks Consensus Estimate by 19.48%.
Total revenues increased 11% year over year to $444.7 million and surpassed the Zacks Consensus Estimate by 3.18%.
Top-line growth was driven by the 12.4% increase in recurring and other revenues (roughly 93% of total revenues) to $415.6 million. Interest income on funds held for clients (about 7% of total revenues) declined 5.6% year over year to $29.1 million.
Quarterly Details of PCTYPaylocity's adjusted gross profit was $327.5 million, up 10.4% from the year-ago period, though the adjusted gross margin contracted roughly 40 basis points (bps) to 73.6%. Non-GAAP operating income rose 13.8% year over year to $120.2 million, with the non-GAAP operating margin expanding about 70 bps to 27%.
Adjusted EBITDA increased 11.3% from the year-ago quarter to $145.5 million, with the adjusted EBITDA margin up roughly 10 bps to 32.7%. Adjusted EBITDA excluding interest income on funds held for clients rose 16.5% year over year to $116.4 million, with margin (as a percentage of recurring and other revenues) up roughly 100 bps to 28%.
GAAP net income for the quarter was $60.3 million, or $1.12 per share, up 24.1% and 30.2%, respectively, from $48.6 million, or 86 cents per share, in the year-ago quarter.
Balance Sheet & Cash Flow DetailsAs of June 30, 2026, Paylocity's cash and cash equivalents were $271.9 million, down from $299.7 million as of March 31, 2026.
Long-term debt totaled $81.3 million as of the end of fiscal 2026, down 50% from $162.5 million a year earlier, reflecting repayment of approximately $81.3 million on the outstanding credit facility balance (originally drawn to fund the October 2024 acquisition of Airbase Inc.) during fiscal 2026.
Net cash provided by operating activities for fiscal 2026 was $533.3 million (30.1% of total revenues), up 27.5% from $418.2 million (26.2% of total revenues) in fiscal 2025. Free cash flow rose 24.8% year over year to $427.8 million, or 24.2% of total revenues, compared with $342.8 million, or 21.5%, in fiscal 2025.
Paylocity repurchased $398.1 million, or approximately 2.8 million shares, of common stock during fiscal 2026, bringing cumulative repurchases since May 2024 to $697.8 million, or approximately 4.6 million shares. Approximately $1.3 billion remained available under the share repurchase authorization as of June 30, 2026.
Acquisitions & Product DevelopmentsIn April 2026, Paylocity completed the acquisition of Grayscale Labs, Inc., an AI-powered recruiting automation company, expanding its recruiting capabilities to help clients engage candidates earlier and move faster through hiring workflows.
The company also launched Paylocity Elevate Solutions, pairing its unified platform with dedicated payroll and HR experts to handle implementation, ongoing payroll processing and HR execution on clients' behalf, comprising Elevate Implementation, Elevate Payroll and Elevate HR.
The company also disclosed a change in accounting convention: beginning in fiscal 2027, deferred contract costs will be amortized over an eight-year useful life, up from seven years, a shift expected to lift fiscal 2027 adjusted EBITDA margins by approximately 120-140 bps.
Management also pointed to continued investment in its AI platform capabilities across HR, Finance and IT workflows as a key driver of the company's product strategy heading into fiscal 2027.
PCTY Issues Q1 & Fiscal 2027 GuidanceFor the first quarter of fiscal 2027, Paylocity expects total revenues in the range of $439.5-$444.5 million, indicating approximately 8% growth from the year-ago period. Recurring and other revenues are projected between $414 million and $419 million, implying approximately 10% growth.
Adjusted EBITDA is projected in the range of $152-$156 million, while adjusted EBITDA excluding interest income on funds held for clients is expected between $126.5 million and $130.5 million.
For fiscal 2027, Paylocity projects total revenues between $1.88 billion and $1.895 billion, implying approximately 7% growth over fiscal 2026. Recurring and other revenues are expected in the range of $1.777-$1.792 billion, suggesting approximately 8% growth.
Adjusted EBITDA is expected between $690 million and $700 million, while adjusted EBITDA excluding interest income on funds held for clients is projected between $587 million and $597 million.
How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates review.
The consensus estimate has shifted 15.39% due to these changes.
VGM ScoresCurrently, Paylocity has a average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Paylocity has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry PlayerPaylocity is part of the Zacks Internet - Software industry. Over the past month, Snap (SNAP - Free Report) , a stock from the same industry, has gained 4.9%. The company reported its results for the quarter ended June 2026 more than a month ago.
Snap reported revenues of $1.6 billion in the last reported quarter, representing a year-over-year change of +18.9%. EPS of $0.06 for the same period compares with -$0.01 a year ago.
For the current quarter, Snap is expected to post earnings of $0.16 per share, indicating a change of +166.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +50% over the last 30 days.
Snap has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.