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Paylocity (PCTY) Q4 Earnings and Revenues Beat Estimates

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Paylocity Holding (PCTY - Free Report) recorded fourth-quarter fiscal 2020 non-GAAP earnings of 32 cents per share, outpacing the Zacks Consensus Estimate of 13 cents. However, the bottom-line figure came in lower than the year-ago quarter’s 34 cents.

Paylocity’s revenues of $130.6 million improved 8.5% year over year and also trumped the Zacks Consensus Estimate of $126.6 million. The top line was driven by a 13% rise in recurring revenues (99% of total revenues), which totaled $129.3 million. However, interest income on funds held for clients plunged 76.8% to $1.3 million.

The company is benefiting from the growing adoption of its solutions among clients with less than 50 employees. Moreover, healthy momentum in the firm’s core and upper end of the market is a tailwind.

Quarter in Detail

The company’s non-GAAP gross profit came in at $91.5 million, up 6.8% year over year. However, non-GAAP gross margin contracted 120 basis points (bps) year over year to 70%.

Adjusted EBITDA increased 3.1% from the year-ago quarter to $30.8 million. Also, adjusted EBITDA margin of 23.6% shrunk 120 bps.

Non-GAAP operating income of $17.8 million remained flat year over year. However, non-GAAP operating margin declined 140 bps to 16.4%.

Paylocity exited the reported quarter with cash, cash equivalents and corporate investments of $285.4 million compared with the $180.6 million witnessed in the prior quarter. Additionally, as of Jun 30, 2020, the company had long-term debt of $100 million.

Cash flow from operations for the fiscal fourth quarter was $112.7 million compared with the $50.7 million recorded in the prior quarter and $115 million in the year-ago period.

Guidance

For first-quarter fiscal 2021, Paylocity expects revenues of $131.5-$135.5 million, indicating 4-7% growth from the year-ago reported figure. Adjusted EBITDA is projected in the band of $18.5-$21.5 million.

Zacks Rank and Other Key Picks

Currently, Paylocity carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector include Benefitfocus (BNFT - Free Report) , Cogent Communications Holdings (CCOI - Free Report) and Synaptics (SYNA - Free Report) , all carrying a Zacks Rank #2 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 Benefitfocus, Cogent and Synaptics is currently pegged at 30%, 10.6%, and 10%, respectively.

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