• Paylocity Announces First Quarter Fiscal Year 2024 Financial Results

    ソース: Nasdaq GlobeNewswire / 02 11 2023 16:05:01   America/New_York

    • Q1 2024 Recurring & Other Revenue of $291.7 million, up 19% year-over-year
    • Q1 2024 Total Revenue of $317.6 million, up 25% year-over-year

    SCHAUMBURG, Ill., Nov. 02, 2023 (GLOBE NEWSWIRE) -- Paylocity Holding Corporation (Nasdaq: PCTY), a leading provider of cloud-based HCM and payroll software solutions, today announced financial results for the first quarter of fiscal year 2024, which ended September 30, 2023.

    “Our solid results continued into fiscal 24, with total revenue growth of 25% and recurring revenue growth of 19%, as our differentiated value proposition of providing the most modern software in the industry continues to resonate in the marketplace. In October, we held our annual Elevate Client Conference, where we connected with several thousand clients and further demonstrated our ongoing commitment to driving innovation with the announcement of two new product releases: Rewards & Recognition, which is designed to help clients improve employee retention by automating and customizing both peer and manager feedback, and Employee Voice, which combines AI with our proprietary, statistically validated engagement model to improve upon our existing Survey functionality and help clients aggregate, analyze, and act on employee feedback at a much larger scale,” said Steve Beauchamp, Co-Chief Executive Officer of Paylocity.

    First Quarter Fiscal 2024 Financial Highlights

    Revenue:

    • Total revenue was $317.6 million, an increase of 25% from the first quarter of fiscal year 2023.
    • Recurring & other revenue was $291.7 million, an increase of 19% from the first quarter of fiscal year 2023.

    Operating Income:

    • GAAP operating income was $41.2 million and non-GAAP operating income was $86.9 million in the first quarter of fiscal year 2024.

    Net Income:

    • GAAP net income was $34.5 million or $0.61 per share in the first quarter of fiscal year 2024 based on 56.9 million diluted weighted average common shares outstanding.

    Adjusted EBITDA:

    • Adjusted EBITDA, a non-GAAP measure, was $104.9 million in the first quarter of fiscal year 2024.

    Balance Sheet and Cash Flow:

    • Cash and cash equivalents totaled $305.0 million as of the first quarter of fiscal year 2024.
    • Cash flow from operations for the first three months of fiscal year 2024 was $62.1 million compared to $16.4 million for the first three months of fiscal year 2023.
    • As of September 30, 2023, Paylocity had no long-term debt and had not drawn on its credit facility.

    A reconciliation of GAAP to non-GAAP financial measures has been provided in this press release, including the accompanying tables. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

    Business Outlook

    Based on information available as of November 2, 2023, Paylocity is issuing guidance for the second quarter and full fiscal year 2024 as indicated below.

    Second Quarter 2024:

    • Total revenue is expected to be in the range of $322.5 million to $326.5 million, which represents approximately 19% growth over fiscal year 2023 second quarter total revenue.
    • Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $100.0 million to $103.0 million.

    Fiscal Year 2024:

    • Total revenue is expected to be in the range of $1.405 billion to $1.410 billion, which represents approximately 20% growth over fiscal year 2023 total revenue.
    • Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $474.0 million to $478.0 million.

    We are unable to reconcile forward-looking non-GAAP Adjusted EBITDA to its directly comparable GAAP financial measure because the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort.

    Conference Call Details
    Paylocity will host a conference call to discuss its first quarter fiscal year 2024 results at 4:30 p.m. Central Time today (5:30 p.m. Eastern Time). A live audio webcast of the conference call along with detailed financial information can be accessed through https://investors.paylocity.com/events-and-presentations where dial in details are provided. A replay of the call will be available and archived via webcast at https://investors.paylocity.com/.

    About Paylocity

    Paylocity is a leading provider of cloud-based HCM and payroll software solutions headquartered in Schaumburg, IL. Founded in 1997 and publicly traded since 2014, Paylocity offers an intuitive, easy-to-use product suite that helps businesses tackle today’s challenges while moving them toward the promise of tomorrow. Known for its unique culture and consistently recognized as one of the best places to work, Paylocity accompanies its clients on the journey to create great workplaces and help people achieve their best through automation, data-driven insights, and engagement. For more information, visit www.paylocity.com.

    Non-GAAP Financial Measures
    The company uses certain non-GAAP financial measures when reporting its financial results, including Adjusted EBITDA, Adjusted EBITDA margin, adjusted gross profit, adjusted gross profit margin, non-GAAP operating income, non-GAAP net income, non-GAAP net income per share, non-GAAP sales and marketing and non-GAAP sales and marketing margin, non-GAAP total research and development and non-GAAP total research and development margin, non-GAAP general and administrative and non-GAAP general and administrative margin, free cash flow and free cash flow margin, certain of which are included in this release. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. We define Adjusted EBITDA as net income (loss) before interest expense, income tax expense (benefit), and depreciation and amortization expense, adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and other items as described later in this release. We calculate Adjusted EBITDA margin as adjusted EBITDA as described in the preceding sentence divided by total revenues. Adjusted gross profit is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and amortization of capitalized internal-use software costs and certain acquired intangibles. Adjusted gross profit margin is calculated as adjusted gross profit as described in the preceding sentence divided by total revenues. Non-GAAP operating income is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, the amortization of acquired intangibles and other items as described later in this release. Non-GAAP sales and marketing expense is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and other items as described later in this release. Non-GAAP sales and marketing margin is calculated by dividing non-GAAP sales and marketing by total revenues. Non-GAAP general and administrative expense is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, the amortization of certain acquired intangibles and other items as described later in this release. Non-GAAP general and administrative margin is calculated by dividing non-GAAP general and administrative margin by total revenues. Non-GAAP net income and non-GAAP net income per share are adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, the amortization of acquired intangibles and other items as described later in this release, including the income tax effect on these items. Non-GAAP total research and development is adjusted for capitalized internal-use software costs paid and to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and other items as described later in this release. Non-GAAP total research and development margin is calculated by dividing non-GAAP total research and development by total revenues. Free cash flow is defined as net cash provided by operating activities less capitalized internal-use software costs, purchase of property and equipment and lease allowances used for tenant improvements. Free cash flow margin is calculated by dividing free cash flow as defined in the preceding sentence divided by total revenues. Please note that other companies may define their non-GAAP financial measures differently than we do. Management presents certain non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance. Management uses these non-GAAP financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. Management also intends to provide these non-GAAP financial measures as part of the company’s future earnings discussions and, therefore, the inclusion of the non-GAAP financial measures should provide consistency in the company’s financial reporting. Non-GAAP financial measures have limitations as an analytical tool. Investors are encouraged to review the reconciliation of the non-GAAP measures to their most directly comparable GAAP measures provided in this release.

    Safe Harbor/Forward Looking Statements
    This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included herein regarding Paylocity’s future operations, ability to scale its business, future financial position and performance, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “seek” and similar expressions (or the negative of these terms) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about management's estimates regarding future revenues and financial performance, long-term financial targets and other statements about management’s beliefs, intentions or goals. Paylocity may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on Paylocity’s forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements, including, but not limited to the general economic conditions in regions in which Paylocity does business, changes in interest rates, business disruptions, reductions in employment and an increase in business failures that have occurred or may occur in the future; Paylocity’s ability to leverage AI Assist and other forms of artificial intelligence and machine learning in its technology, which may be constrained by current and future laws, regulations, interpretive positions or standards governing new and evolving technologies and ethical considerations that could restrict or impose burdensome and costly requirements on its ability to continue to leverage data in innovative ways; Paylocity’s ability to retain existing clients and to attract new clients to enter into subscriptions for its services; the challenges associated with a growing company’s ability to effectively service clients in a dynamic and competitive market; challenges associated with expanding and evolving a sales organization to effectively address new geographies and products and services; challenges related to cybersecurity threats and evolving cybersecurity regulations; Paylocity’s reliance on and ability to expand its referral network of third parties; Paylocity’s reliance on third party payroll partners in foreign jurisdictions in its Blue Marble business; difficulties associated with accurately forecasting revenue and appropriately planning expenses; challenges with managing growth effectively; risks related to regulatory, legislative and judicial uncertainty in Paylocity’s markets; Paylocity’s ability to protect and defend its intellectual property; the risk that Paylocity’s security measures are compromised or a threat actor gains unauthorized access to customer data; unexpected events in the market for Paylocity’s solutions; changes in the competitive environment in Paylocity’s industry and the markets in which it operates; adverse changes in general economic or market conditions; changes in the employment rates of Paylocity’s clients and the resultant impact on revenue; the possibility that Paylocity may be adversely affected by other economic, business, and/or competitive factors; and other risks and potential factors that could affect Paylocity’s business and financial results identified in Paylocity’s filings with the Securities and Exchange Commission (the “SEC”), including its 10-K filed with the SEC on August 4, 2023. Additional information will also be set forth in Paylocity’s future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that Paylocity makes with the SEC. These forward-looking statements represent Paylocity’s expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Paylocity disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.

     
    PAYLOCITY HOLDING CORPORATION
    Unaudited Consolidated Balance Sheets
    (in thousands, except per share data)
     
     June 30,
    2023
     September 30,
    2023
    Assets   
    Current assets:   
    Cash and cash equivalents$288,767  $305,031 
    Accounts receivable, net 25,085   30,111 
    Deferred contract costs 78,109   82,438 
    Prepaid expenses and other 35,061   36,971 
    Total current assets before funds held for clients 427,022   454,551 
    Funds held for clients 2,621,415   2,528,353 
    Total current assets 3,048,437   2,982,904 
    Capitalized internal-use software, net 86,127   95,522 
    Property and equipment, net 64,069   63,341 
    Operating lease right-of-use assets 44,067   42,890 
    Intangible assets, net 34,527   31,991 
    Goodwill 102,054   102,054 
    Long-term deferred contract costs 294,222   305,788 
    Long‑term prepaid expenses and other 6,331   5,925 
    Deferred income tax assets 15,846   16,362 
    Total assets$3,695,680  $3,646,777 
        
    Liabilities and Stockholders’ Equity   
    Current liabilities:   
    Accounts payable$6,153  $8,749 
    Accrued expenses 143,287   131,693 
    Total current liabilities before client fund obligations 149,440   140,442 
    Client fund obligations 2,625,355   2,531,789 
    Total current liabilities 2,774,795   2,672,231 
    Long-term operating lease liabilities 62,471   60,584 
    Other long-term liabilities 3,731   3,584 
    Deferred income tax liabilities 11,820   17,739 
    Total liabilities$2,852,817  $2,754,138 
    Stockholders’ equity:   
    Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2023 and September 30, 2023$  $ 
    Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2023 and September 30, 2023; 55,912 shares issued and outstanding at June 30, 2023 and 56,167 shares issued and outstanding at September 30, 2023 56   56 
    Additional paid-in capital 380,632   395,771 
    Retained earnings 466,690   501,207 
    Accumulated other comprehensive loss (4,515)  (4,395)
    Total stockholders' equity$842,863  $892,639 
    Total liabilities and stockholders’ equity$3,695,680  $3,646,777 
     


    PAYLOCITY HOLDING CORPORATION
    Unaudited Consolidated Statements of Operations and Comprehensive Income
    (in thousands, except per share data)
     
     Three Months Ended
    September 30,
      2022   2023
    Revenues:   
    Recurring and other revenue$245,406  $291,685
    Interest income on funds held for clients 7,874   25,901
    Total revenues 253,280   317,586
    Cost of revenues 84,543   101,467
    Gross profit 168,737   216,119
    Operating expenses:   
    Sales and marketing 71,063   80,403
    Research and development 40,093   44,605
    General and administrative 50,492   49,922
    Total operating expenses 161,648   174,930
    Operating income 7,089   41,189
    Other income (expense) (163)  3,225
    Income before income taxes 6,926   44,414
    Income tax expense (benefit) (23,426)  9,897
    Net income$30,352  $34,517
    Other comprehensive income (loss), net of tax (2,372)  120
    Comprehensive income$27,980  $34,637
        
    Net income per share:   
    Basic$0.55  $0.62
    Diluted$0.54  $0.61
        
    Weighted-average shares used in computing net income per share:   
    Basic 55,453   56,037
    Diluted 56,664   56,881
     

    Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises for each of the three months ended September 30, are included in the above line items:

     
     Three Months Ended
    September 30,
      2022  2023
    Cost of revenues$5,045 $5,602
    Sales and marketing 10,500  9,871
    Research and development 10,234  10,870
    General and administrative 19,199  15,633
    Total stock-based compensation expense and employer payroll taxes related to stock releases and option exercises$44,978 $41,976
     


    PAYLOCITY HOLDING CORPORATION
    Unaudited Consolidated Statements of Cash Flows
    (in thousands)
     
     Three Months Ended
    September 30,
      2022   2023 
    Cash flows from operating activities:   
    Net income$30,352  $34,517 
    Adjustments to reconcile net income to net cash provided by operating activities:   
    Stock-based compensation expense 39,813   39,005 
    Depreciation and amortization expense 14,267   17,121 
    Deferred income tax expense (benefit) (23,415)  5,391 
    Provision for credit losses 266   181 
    Net accretion of discounts on available-for-sale securities (842)  (1,392)
    Amortization of debt issuance costs 94   65 
    Other 125   124 
    Changes in operating assets and liabilities:   
    Accounts receivable (6,020)  (4,801)
    Deferred contract costs (19,328)  (14,985)
    Prepaid expenses and other 614   (1,669)
    Accounts payable (1,805)  1,569 
    Accrued expenses and other (17,734)  (12,984)
    Net cash provided by operating activities 16,387   62,142 
    Cash flows from investing activities:   
    Purchases of available-for-sale securities (118,926)  (92,567)
    Proceeds from sales and maturities of available-for-sale securities 42,850   101,216 
    Capitalized internal-use software costs (9,953)  (14,193)
    Purchases of property and equipment (3,447)  (3,454)
    Other investing activities    (406)
    Net cash used in investing activities (89,476)  (9,404)
    Cash flows from financing activities:   
    Net change in client fund obligations (1,688,339)  (93,566)
    Taxes paid related to net share settlement of equity awards (74,071)  (28,825)
    Payment of debt issuance costs (855)  (11)
    Net cash used in financing activities (1,763,265)  (122,402)
    Net change in cash, cash equivalents and funds held for clients' cash and cash equivalents (1,836,354)  (69,664)
    Cash, cash equivalents and funds held for clients' cash and cash equivalents—beginning of period 3,793,453   2,421,312 
    Cash, cash equivalents and funds held for clients' cash and cash equivalents—end of period$1,957,099  $2,351,648 
    Supplemental Disclosure of Non-Cash Investing and Financing Activities   
    Purchases of property and equipment and internal-use software, accrued but not paid$  $1,803 
    Liabilities assumed for acquisitions$117  $ 
    Supplemental Disclosure of Cash Flow Information   
    Cash paid for interest$62  $124 
    Cash paid for income taxes$19  $6,207 
    Reconciliation of cash, cash equivalents and funds held for clients' cash and cash equivalents to the Consolidated Balance Sheets   
    Cash and cash equivalents$65,484  $305,031 
    Funds held for clients' cash and cash equivalents 1,891,615   2,046,617 
    Total cash, cash equivalents and funds held for clients' cash and cash equivalents$1,957,099  $2,351,648 
     


    Paylocity Holding Corporation
    Reconciliation of GAAP to non-GAAP Financial Measures
    (In thousands except per share data) 
     
     Three Months Ended
    September 30,
      2022  2023
    Reconciliation from Gross profit to Adjusted gross profit:   
    Gross profit$168,737 $216,119
    Amortization of capitalized internal-use software costs 7,042  9,535
    Amortization of certain acquired intangibles 1,854  1,854
    Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 5,045  5,602
    Other items (1) 19  
    Adjusted gross profit$182,697 $233,110


     Three Months Ended
    September 30,
      2022  2023
    Reconciliation from Operating income to Non-GAAP Operating income:   
    Operating income$7,089 $41,189
    Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 44,978  41,976
    Amortization of acquired intangibles 2,771  2,536
    Other items (2) 265  1,185
    Non-GAAP Operating income$55,103 $86,886


     Three Months Ended
    September 30,
      2022   2023 
    Reconciliation from Net income to Non-GAAP Net income:   
    Net income$30,352  $34,517 
    Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 44,978   41,976 
    Amortization of acquired intangibles 2,771   2,536 
    Other items (2) 265   1,185 
    Income tax effect on adjustments (3) (22,935)  (830)
    Non-GAAP Net income$55,431  $79,384 


     Three Months Ended
    September 30,
      2022  2023
    Calculation of Non-GAAP Net income per share:   
    Non-GAAP Net income$55,431 $79,384
    Diluted weighted-average number of common shares 56,664  56,881
    Non-GAAP Net income per share$0.98 $1.40


     Three Months Ended
    September 30,
      2022   2023
    Reconciliation from Net income to Adjusted EBITDA:   
    Net income$30,352  $34,517
    Interest expense 187   190
    Income tax expense (benefit) (23,426)  9,897
    Depreciation and amortization expense 14,267   17,121
    EBITDA 21,380   61,725
    Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 44,978   41,976
    Other items (2) 265   1,185
    Adjusted EBITDA$66,623  $104,886


     Three Months Ended
    September 30,
      2022  2023
    Reconciliation of Non-GAAP sales and marketing:   
    Sales and marketing$71,063 $80,403
    Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 10,500  9,871
    Other items (1) 22  
    Non-GAAP sales and marketing$60,541 $70,532


     Three Months Ended
    September 30,
      2022  2023
    Reconciliation of Non-GAAP total research and development:   
    Research and development$40,093 $44,605
    Capitalized internal-use software costs 9,953  14,193
    Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 10,234  10,870
    Other items (1) 218  222
    Non-GAAP total research and development$39,594 $47,706


     Three Months Ended
    September 30,
      2022  2023
    Reconciliation of Non-GAAP general and administrative:   
    General and administrative$50,492 $49,922
    Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 19,199  15,633
    Amortization of certain acquired intangibles 917  682
    Other items (2) 6  963
    Non-GAAP general and administrative$30,370 $32,644


     Three Months Ended
    September 30,
      2022   2023 
    Reconciliation of Free Cash Flow:   
    Net cash provided by operating activities$16,387  $62,142 
    Capitalized internal-use software costs (9,953)  (14,193)
    Purchases of property and equipment (3,447)  (3,454)
    Free Cash Flow$2,987  $44,495 
     
    (1) Represents acquisition-related costs.
     
    (2) Represents acquisition and other nonrecurring transaction-related costs.
     
    (3) Includes the income tax effect on non-GAAP net income adjustments related to stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, amortization of acquired intangibles and other items, which include acquisition and other nonrecurring transaction-related costs.
     

    Contact:
    Ryan Glenn
    investors@paylocity.com
    www.paylocity.com


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