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Paylocity (PCTY) Q3 Earnings and Revenues Increase Y/Y
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Paylocity Holding Corporation (PCTY - Free Report) reported third-quarter of fiscal 2017 non-GAAP earnings of 40 cents per share compared with 21 cents reported in the year-ago quarter.
On a GAAP basis, Paylocity posted earnings of 27 cents per share compared with 12 cents per share reported in the year-ago quarter.
Quarter Details
The company’s revenues came in at $90.3 million, beating the Zacks Consensus Estimate of $88 million. Rvenues also increased 27.9% year over year driven by new client addition and existing client growth.
The top line was also backed by a 29% surge in recurring revenues (96% of total revenue) and a 12.3% increase in implementation and other revenues.
The company’s gross margin expanded 310 basis points (bps) year over year to 64.6%, primarily due to higher revenue base.
Paylocity reported operating income of $14.9 million, higher than $6.2 million reported in the year-ago quarter. Operating margin came in at 16.5% compared with 8.8% reported in the year-ago quarter. Consequently, net income during the quarter was $14.8 million compared with $6.2 million in the year-ago period.
Paylocity exited the quarter with cash and cash equivalents of $101.5 million compared with $82.2 million in the previous quarter. Receivables were $2.2 million compared with $2.1 million in the previous quarter.
Paylocity has no long-term debt. The company generated $27.9 million of cash flow from operational activities during the quarter.
Guidance
The company provided outlook for the fourth-quarter and raised its fiscal 2017 guidance. For the fourth quarter of fiscal 2017, Paylocity expects revenues in the range of $73.1–$74.1 million. The Zacks Consensus Estimate is pegged at $75 million. Adjusted EBITDA is projected in the band of $5.3–$6.3 million. Non-GAAP earnings per share are expected to be in the range of 0–2 cents.
For fiscal 2017, Paylocity anticipates revenues in the range of $297–$298 million (previously $296–$298 million). The Zacks Consensus Estimate stands at $297 million. Adjusted EBITDA is now projected in the range of $50–$51 million (previously $42–$43 million). Non-GAAP earnings per share are now expected within 57–59 cents (previously 41–43 cents).
Share Price
In the last one year, shares of Paylocity increased 22.3%, outperforming the Zacks Categorized Internet-Software industry, which gained 21.6%.
Our Take
Paylocity’s both top and bottom line for the third quarter increased year over year. The company also raised its fiscal 2017 guidance.
We remain positive about Paylocity’s regular investments in SaaS technology. Notably, in the last few quarters, clients moving from traditional payroll service providers to the company’s SaaS-based services generated a significant portion of Paylocity’s revenues. Therefore, we believe that regular investments in technological upgrades, along with product innovations, will continue to boost the company’s top line in the long run. Such initiatives are also likely to have positive impact on its forthcoming results.
Furthermore, higher adoption of Paylocity’s ACA dashboard application, which specializes in tracking employee count, employee status and health care plan affordability, will act as a tailwind.
However, competition in the payroll processing sector from new entrants as well as existing players such as Automatic Data Processing, Inc. (ADP - Free Report) , Oracle Corporation (ORCL - Free Report) and SAP SE (SAP - Free Report) remains a major headwind.
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Paylocity (PCTY) Q3 Earnings and Revenues Increase Y/Y
Paylocity Holding Corporation (PCTY - Free Report) reported third-quarter of fiscal 2017 non-GAAP earnings of 40 cents per share compared with 21 cents reported in the year-ago quarter.
On a GAAP basis, Paylocity posted earnings of 27 cents per share compared with 12 cents per share reported in the year-ago quarter.
Quarter Details
The company’s revenues came in at $90.3 million, beating the Zacks Consensus Estimate of $88 million. Rvenues also increased 27.9% year over year driven by new client addition and existing client growth.
The top line was also backed by a 29% surge in recurring revenues (96% of total revenue) and a 12.3% increase in implementation and other revenues.
The company’s gross margin expanded 310 basis points (bps) year over year to 64.6%, primarily due to higher revenue base.
Paylocity reported operating income of $14.9 million, higher than $6.2 million reported in the year-ago quarter. Operating margin came in at 16.5% compared with 8.8% reported in the year-ago quarter. Consequently, net income during the quarter was $14.8 million compared with $6.2 million in the year-ago period.
Paylocity exited the quarter with cash and cash equivalents of $101.5 million compared with $82.2 million in the previous quarter. Receivables were $2.2 million compared with $2.1 million in the previous quarter.
Paylocity has no long-term debt. The company generated $27.9 million of cash flow from operational activities during the quarter.
Guidance
The company provided outlook for the fourth-quarter and raised its fiscal 2017 guidance. For the fourth quarter of fiscal 2017, Paylocity expects revenues in the range of $73.1–$74.1 million. The Zacks Consensus Estimate is pegged at $75 million. Adjusted EBITDA is projected in the band of $5.3–$6.3 million. Non-GAAP earnings per share are expected to be in the range of 0–2 cents.
For fiscal 2017, Paylocity anticipates revenues in the range of $297–$298 million (previously $296–$298 million). The Zacks Consensus Estimate stands at $297 million. Adjusted EBITDA is now projected in the range of $50–$51 million (previously $42–$43 million). Non-GAAP earnings per share are now expected within 57–59 cents (previously 41–43 cents).
Share Price
In the last one year, shares of Paylocity increased 22.3%, outperforming the Zacks Categorized Internet-Software industry, which gained 21.6%.
Our Take
Paylocity’s both top and bottom line for the third quarter increased year over year. The company also raised its fiscal 2017 guidance.
We remain positive about Paylocity’s regular investments in SaaS technology. Notably, in the last few quarters, clients moving from traditional payroll service providers to the company’s SaaS-based services generated a significant portion of Paylocity’s revenues. Therefore, we believe that regular investments in technological upgrades, along with product innovations, will continue to boost the company’s top line in the long run. Such initiatives are also likely to have positive impact on its forthcoming results.
Furthermore, higher adoption of Paylocity’s ACA dashboard application, which specializes in tracking employee count, employee status and health care plan affordability, will act as a tailwind.
However, competition in the payroll processing sector from new entrants as well as existing players such as Automatic Data Processing, Inc. (ADP - Free Report) , Oracle Corporation (ORCL - Free Report) and SAP SE (SAP - Free Report) remains a major headwind.
Currently, Paylocity has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>