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Paylocity (PCTY) Q4 Earnings & Revenues Top Estimates, Up Y/Y
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Paylocity Holding (PCTY - Free Report) recorded fourth-quarter fiscal 2021 non-GAAP earnings of 46 cents per share, outpacing the Zacks Consensus Estimate of 28 cents. Moreover, the bottom-line figure comes in approximately 44% higher than the year-ago quarter’s earnings of 32 cents per share. This upswing was mainly driven by higher sales, better cost management and income-tax benefits.
Paylocity’s revenues of $167.5 million improved 28% year over year and also trumped the Zacks Consensus Estimate of $162.1 million. The top line was supported by a 29% increase in recurring revenues (99% of total revenues), which totaled $166.5 million. However, interest income on funds held for clients plunged 30% to $0.92 million.
This year-over-year top-line growth primarily resulted from better sales execution, which helped the company add more new clients, and higher revenue retention ratio. Paylocity ended the quarter with 28,750 clients, 18% higher than the 24,450 customers at the end of fourth-quarter fiscal 2020. Moreover, revenue retention ratio remained above 92%.
The company is benefiting from the growing adoption of its solutions among clients with less than 50 employees. Further, healthy momentum in the firm’s core and upper end of the market is a tailwind. Nevertheless, lower interest rates have been negatively impacting the company’s interest income on funds held for clients.
Paylocity Holding Corporation Price, Consensus and EPS Surprise
The company’s non-GAAP gross profit came in at $116.3 million, up 27.1% year on year. Nonetheless, non-GAAP gross margin contracted 50 basis points (bps) year over year to 69.5%.
Adjusted EBITDA increased 21% from the year-ago quarter to $37.3 million. However, adjusted EBITDA margin of 22.2% shrunk 140 bps.
Non-GAAP operating income increased to $27.4 million from the $21.4 million reported in the year-ago period. Also, non-GAAP operating margin contracted 10 bps to 16.3%.
Paylocity exited the reported quarter with cash, cash equivalents and corporate investments of $208 million compared with the $182 million witnessed in the previous quarter. Additionally, the company had no long-term debt outstanding as of Jun 30, 2021.
During fiscal 2021, the company generated $124.6 million of operating cash flow.
Outlook
Paylocity issued the guidance for first-quarter and fiscal 2022. For the first quarter, the company expects revenues of $171.5-$175.5 million, indicating 26-29% growth from the year-ago period. Adjusted EBITDA is projected in the band of $37.8-$40.8 million.
For fiscal 2022, the company expects revenues of $790-$795 million, suggesting approximately 25% growth from fiscal 2021. Adjusted EBITDA is estimated in the band of $209.5-$213.5 million.
Zacks Rank & Stocks to Consider
Paylocity currently carries a Zacks Rank #3 (Hold).
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Paylocity (PCTY) Q4 Earnings & Revenues Top Estimates, Up Y/Y
Paylocity Holding (PCTY - Free Report) recorded fourth-quarter fiscal 2021 non-GAAP earnings of 46 cents per share, outpacing the Zacks Consensus Estimate of 28 cents. Moreover, the bottom-line figure comes in approximately 44% higher than the year-ago quarter’s earnings of 32 cents per share. This upswing was mainly driven by higher sales, better cost management and income-tax benefits.
Paylocity’s revenues of $167.5 million improved 28% year over year and also trumped the Zacks Consensus Estimate of $162.1 million. The top line was supported by a 29% increase in recurring revenues (99% of total revenues), which totaled $166.5 million. However, interest income on funds held for clients plunged 30% to $0.92 million.
This year-over-year top-line growth primarily resulted from better sales execution, which helped the company add more new clients, and higher revenue retention ratio. Paylocity ended the quarter with 28,750 clients, 18% higher than the 24,450 customers at the end of fourth-quarter fiscal 2020. Moreover, revenue retention ratio remained above 92%.
The company is benefiting from the growing adoption of its solutions among clients with less than 50 employees. Further, healthy momentum in the firm’s core and upper end of the market is a tailwind. Nevertheless, lower interest rates have been negatively impacting the company’s interest income on funds held for clients.
Paylocity Holding Corporation Price, Consensus and EPS Surprise
Paylocity Holding Corporation price-consensus-eps-surprise-chart | Paylocity Holding Corporation Quote
Quarter in Detail
The company’s non-GAAP gross profit came in at $116.3 million, up 27.1% year on year. Nonetheless, non-GAAP gross margin contracted 50 basis points (bps) year over year to 69.5%.
Adjusted EBITDA increased 21% from the year-ago quarter to $37.3 million. However, adjusted EBITDA margin of 22.2% shrunk 140 bps.
Non-GAAP operating income increased to $27.4 million from the $21.4 million reported in the year-ago period. Also, non-GAAP operating margin contracted 10 bps to 16.3%.
Paylocity exited the reported quarter with cash, cash equivalents and corporate investments of $208 million compared with the $182 million witnessed in the previous quarter. Additionally, the company had no long-term debt outstanding as of Jun 30, 2021.
During fiscal 2021, the company generated $124.6 million of operating cash flow.
Outlook
Paylocity issued the guidance for first-quarter and fiscal 2022. For the first quarter, the company expects revenues of $171.5-$175.5 million, indicating 26-29% growth from the year-ago period. Adjusted EBITDA is projected in the band of $37.8-$40.8 million.
For fiscal 2022, the company expects revenues of $790-$795 million, suggesting approximately 25% growth from fiscal 2021. Adjusted EBITDA is estimated in the band of $209.5-$213.5 million.
Zacks Rank & Stocks to Consider
Paylocity currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include Microsoft (MSFT - Free Report) , Cadence Design Systems (CDNS - Free Report) and Texas Instruments (TXN - Free Report) , all carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term earnings growth rate for Microsoft, Cadence Design and Texas Instruments is currently pegged at 11.5%, 11.7% and 9.3%, respectively.