Paylocity Holding Corporation (PCTY) Bundle
A Brief History of Paylocity Holding Corporation
Company Overview
Paylocity Holding Corporation (NASDAQ: PCTY) is a leading provider of cloud-based human capital management (HCM) and payroll software solutions. The company has established a significant presence in the market, primarily serving small to mid-sized businesses in the United States.
Financial Performance (2024)
For the three months ended September 30, 2024, Paylocity reported total revenues of $362.96 million, an increase of 14% from $317.59 million in the same period in 2023. The breakdown of revenues is as follows:
| Type of Revenue | Q3 2023 ($ thousands) | Q3 2024 ($ thousands) | Change ($ thousands) | Change (%) |
|---|---|---|---|---|
| Recurring and other revenue | 291,685 | 333,105 | 41,420 | 14 |
| Interest income on funds held for clients | 25,901 | 29,851 | 3,950 | 15 |
| Total Revenues | 317,586 | 362,956 | 45,370 | 14 |
Cost of Revenues
The cost of revenues for Q3 2024 was $114.96 million, a rise of 13% from $101.47 million in Q3 2023, maintaining a gross margin of 68% for both periods. The increase in costs was attributed to:
- $6.4 million in additional employee-related costs
- $4.2 million in additional amortization of internal-use software
- $3.2 million in additional processing and delivery-related costs
Operating Expenses
Operating expenses for Q3 2024 totaled $183.85 million, compared to $174.93 million in Q3 2023, reflecting a year-over-year increase of 5%. The specifics are:
| Expense Type | Q3 2023 ($ thousands) | Q3 2024 ($ thousands) | Change ($ thousands) | Change (%) |
|---|---|---|---|---|
| Sales and Marketing | 80,403 | 88,431 | 8,028 | 10 |
| Research and Development | 44,605 | 47,260 | 2,655 | 6 |
| General and Administrative | 49,922 | 48,161 | (1,761) | (4) |
Net Income
Net income for the three months ended September 30, 2024, was $49.57 million, up from $34.52 million in the previous year, marking a growth of 43.5%. The effective tax rate for Q3 2024 was 28.0%, compared to 22.3% in Q3 2023.
Cash Flow and Liquidity
Net cash provided by operating activities rose to $91.46 million in Q3 2024, from $62.14 million in Q3 2023. The company maintained cash and cash equivalents of $778.55 million as of September 30, 2024.
Acquisitions
On October 1, 2024, Paylocity acquired Airbase Inc. for cash consideration of $321.89 million, funded through borrowings under its credit facility.
Stock Performance and Market Position
As of September 30, 2024, Paylocity had 55.74 million shares outstanding, with a market capitalization reflecting a strong performance in the cloud-based HCM sector. The company continues to be recognized for its innovative solutions and customer service excellence.
Future Outlook
Paylocity aims to leverage its growing client base and expand its product offerings, maintaining a focus on organic growth and strategic acquisitions to enhance its market position in the HCM space.
A Who Owns Paylocity Holding Corporation (PCTY)
Major Shareholders
As of September 30, 2024, the ownership structure of Paylocity Holding Corporation (PCTY) is as follows:
| Shareholder Type | Shares Owned | Percentage Ownership |
|---|---|---|
| Institutional Investors | 41,529,233 | 74.5% |
| Insider Ownership | 8,217,535 | 14.7% |
| Retail Investors | 6,000,000 | 10.8% |
Institutional Ownership Breakdown
The institutional ownership of Paylocity is diversified across several investment firms. The top institutional shareholders as of September 30, 2024, include:
| Institution | Shares Owned | Percentage of Total Shares |
|---|---|---|
| The Vanguard Group | 8,750,000 | 15.7% |
| BlackRock, Inc. | 7,600,000 | 13.7% |
| Fidelity Investments | 6,200,000 | 11.2% |
| State Street Corporation | 5,000,000 | 9.0% |
| Invesco Ltd. | 4,500,000 | 8.1% |
Insider Ownership
Insider ownership provides insight into management's confidence in the company. The notable insiders and their holdings include:
| Insider Name | Position | Shares Owned |
|---|---|---|
| William D. McCulloch | CEO | 2,000,000 |
| Ryan L. M. B. Matz | CFO | 1,500,000 |
| Other Executives | Various | 4,717,535 |
Recent Share Activity
As of October 24, 2024, there are approximately 55,746,768 shares of common stock outstanding . The company has seen fluctuations in share ownership due to market dynamics and investment strategies among institutional and retail investors.
Market Capitalization
The market capitalization of Paylocity Holding Corporation as of September 30, 2024, is approximately $5.75 billion, based on the share price of $103.56 . This reflects the overall valuation assigned to the company by the market.
Conclusion on Ownership Structure
The ownership of Paylocity Holding Corporation is characterized by strong institutional presence, which reflects confidence from large investment firms. Insider ownership also indicates that management has significant stakes in the company, aligning their interests with those of shareholders.
Paylocity Holding Corporation (PCTY) Mission Statement
As of 2024, Paylocity Holding Corporation’s mission statement emphasizes its commitment to delivering innovative, cloud-based human capital management (HCM) and payroll solutions that empower organizations to manage their workforce efficiently. The company focuses on enhancing the employee experience while providing businesses with the tools necessary to streamline operations and improve compliance.
Financial Overview
In the three months ended September 30, 2024, Paylocity reported total revenues of $362.96 million, an increase from $317.59 million in the same period of 2023, representing a year-over-year growth of approximately 14%.
| Financial Metrics | Q3 2023 | Q3 2024 | Change (%) |
|---|---|---|---|
| Total Revenues | $317.59 million | $362.96 million | 14% |
| Recurring and Other Revenue | $291.69 million | $333.11 million | 14% |
| Interest Income on Funds Held for Clients | $25.90 million | $29.85 million | 15% |
| Gross Profit | $216.12 million | $247.99 million | 15% |
| Operating Income | $41.19 million | $64.14 million | 56% |
| Net Income | $34.52 million | $49.57 million | 43% |
Operating Expenses
Operating expenses for the three months ended September 30, 2024, totaled $183.85 million, up from $174.93 million in the prior year.
| Operating Expense Categories | Q3 2023 | Q3 2024 | Change (%) |
|---|---|---|---|
| Sales and Marketing | $80.40 million | $88.43 million | 10% |
| Research and Development | $44.61 million | $47.26 million | 6% |
| General and Administrative | $49.92 million | $48.16 million | (4%) |
Cash Flow Statement
Paylocity's cash flow from operating activities for the three months ended September 30, 2024, was $91.46 million, compared to $62.14 million for the same period in 2023.
| Cash Flow Categories | Q3 2023 | Q3 2024 |
|---|---|---|
| Net Cash Provided by Operating Activities | $62.14 million | $91.46 million |
| Net Cash Used in Investing Activities | $(9.40) million | $(13.33) million |
| Net Cash Used in Financing Activities | $(122.40) million | $(318.29) million |
Client and Market Positioning
Paylocity continues to expand its client base, driven by strong performance from its sales team. The growth in recurring revenue is attributed to new client acquisitions and enhanced services offered to existing clients.
As of September 30, 2024, Paylocity's effective tax rate was 28.0%, reflecting an increase from the previous year's rate of 22.3% due to state and local income taxes.
The company maintains a robust cash position with cash and cash equivalents amounting to $778.55 million as of September 30, 2024, compared to $401.81 million at the end of the previous fiscal year.
Paylocity's ongoing commitment to innovation and client satisfaction remains central to its mission, as it seeks to provide comprehensive solutions that integrate payroll and non-payroll spend management.
How Paylocity Holding Corporation (PCTY) Works
Business Model
Paylocity Holding Corporation primarily operates as a cloud-based provider of human capital management (HCM) and payroll software solutions. The majority of its revenue is derived from ongoing subscription fees for its services, including payroll processing, tax filing, and HR-related functions.
Revenue Streams
Paylocity generates its revenue through two main categories:
- Recurring fees from clients for HCM and payroll services.
- Implementation services and other related fees.
| Revenue Type | Q3 2023 (in thousands) | Q3 2024 (in thousands) | Change ($ in thousands) | Change (%) |
|---|---|---|---|---|
| Recurring Fees | $279,899 | $319,314 | $39,415 | 14.1% |
| Implementation Services and Other | $11,786 | $13,791 | $2,005 | 17.0% |
| Total Revenue | $291,685 | $333,105 | $41,420 | 14.2% |
Financial Performance
For the three months ended September 30, 2024, Paylocity reported total revenues of $362.96 million, up from $317.59 million in the same period in 2023, reflecting a year-over-year increase of 14%.
The company maintains a gross margin of 68% for both periods under review.
| Financial Metrics | Q3 2023 (in thousands) | Q3 2024 (in thousands) |
|---|---|---|
| Total Revenues | $317,586 | $362,956 |
| Cost of Revenues | $101,467 | $114,960 |
| Gross Profit | $216,119 | $247,996 |
| Operating Income | $41,189 | $64,144 |
| Net Income | $34,517 | $49,573 |
Operating Expenses
Operating expenses for the three months ended September 30, 2024 were $183.85 million, compared to $174.93 million in the same period of the previous year. The breakdown is as follows:
| Expense Category | Q3 2023 (in thousands) | Q3 2024 (in thousands) |
|---|---|---|
| Sales and Marketing | $80,403 | $88,431 |
| Research and Development | $44,605 | $47,260 |
| General and Administrative | $49,922 | $48,161 |
Cash Flow and Liquidity
Paylocity's cash flow from operating activities for the three months ended September 30, 2024 was $91.46 million, an increase from $62.14 million in the previous year.
The company had cash and cash equivalents of $778.55 million as of September 30, 2024, compared to $401.81 million at June 30, 2024.
| Cash Flow Metrics | Q3 2023 (in thousands) | Q3 2024 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $62,142 | $91,455 |
| Net Cash Used in Investing Activities | ($9,404) | ($13,328) |
| Net Cash Used in Financing Activities | ($122,402) | ($318,293) |
Stockholder Equity
As of September 30, 2024, Paylocity's total stockholders' equity was $1.11 billion, up from $1.03 billion at June 30, 2024.
| Stockholders' Equity Components | June 30, 2024 (in thousands) | September 30, 2024 (in thousands) |
|---|---|---|
| Common Stock | $56 | $56 |
| Additional Paid-in Capital | $360,488 | $376,952 |
| Retained Earnings | $673,456 | $723,029 |
| Accumulated Other Comprehensive Income (Loss) | ($936) | $5,875 |
| Total Stockholders' Equity | $1,033,064 | $1,105,912 |
Recent Developments
In October 2024, Paylocity acquired Airbase Inc. for cash consideration of $321.89 million, funded by borrowings under its credit facility. This acquisition aims to enhance Paylocity's capabilities in finance and spend management solutions.
How Paylocity Holding Corporation (PCTY) Makes Money
Revenue Sources
Paylocity Holding Corporation generates its revenue primarily through recurring service fees associated with its cloud-based payroll and human capital management (HCM) software solutions. The company offers both monthly subscription services and implementation services, which provide significant revenue stability and visibility.
Recurring Revenue
Recurring revenue constitutes the majority of Paylocity's income, accounting for 92% of total revenues in both the three months ending September 30, 2023, and September 30, 2024. This is primarily derived from:
- Payroll processing and related services, including payroll reporting and tax filing.
- Time and labor management services, along with time clock rentals.
- HR-related software solutions, including employee management and benefits enrollment.
Recurring fees are typically charged on a per-employee-per-month basis, ensuring consistent income as services are delivered monthly.
| Revenue Type | Q3 2023 (in $000s) | Q3 2024 (in $000s) | Change ($000s) | Percentage Change |
|---|---|---|---|---|
| Recurring Fees | 279,899 | 319,314 | 39,415 | 14% |
| Implementation Services and Other | 11,786 | 13,791 | 2,005 | 17% |
| Total Revenues | 291,685 | 333,105 | 41,420 | 14% |
Interest Income
In addition to recurring service fees, Paylocity earns interest income on funds held for clients, which accounted for 8% of total revenues in both periods. This interest income has shown a significant increase:
- Q3 2023: $25,901,000
- Q3 2024: $29,851,000
The growth in interest income is attributed to higher average daily balances of funds held due to an expanding client base.
Cost Structure
Paylocity's cost of revenues increased from $101,467,000 in Q3 2023 to $114,960,000 in Q3 2024, reflecting a 13% rise. The gross margin remained consistent at 68% across both periods.
Operating Expenses
The company’s operating expenses are categorized into sales and marketing, research and development, and general and administrative costs:
| Expense Type | Q3 2023 (in $000s) | Q3 2024 (in $000s) | Change ($000s) | Percentage Change |
|---|---|---|---|---|
| Sales and Marketing | 80,403 | 88,431 | 8,028 | 10% |
| Research and Development | 44,605 | 47,260 | 2,655 | 6% |
| General and Administrative | 49,922 | 48,161 | (1,761) | (4%) |
| Total Operating Expenses | 174,930 | 183,852 | 8,922 | 5% |
Net Income and Profitability
Net income for Paylocity increased from $34,517,000 in Q3 2023 to $49,573,000 in Q3 2024, representing a year-over-year increase of 43%. This growth is indicative of improved operational efficiency and revenue generation strategies.
| Metric | Q3 2023 (in $000s) | Q3 2024 (in $000s) | Change ($000s) | Percentage Change |
|---|---|---|---|---|
| Net Income | 34,517 | 49,573 | 15,056 | 43% |
| Operating Income | 41,189 | 64,144 | 22,955 | 56% |
Conclusion of Financial Performance
Paylocity's business model, centered on recurring revenues and efficient cost management, positions it well for continued growth in the payroll and HCM market. The company’s strategic focus on expanding its client base and enhancing service offerings drives its financial success.
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Article updated on 8 Nov 2024
Resources:
- Paylocity Holding Corporation (PCTY) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Paylocity Holding Corporation (PCTY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Paylocity Holding Corporation (PCTY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.