It has been about a month since the last earnings report for Paylocity (
PCTY Quick Quote PCTY - Free Report) . Shares have added about 2.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Paylocity due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Paylocity Beats Q1 Earnings and Revenue Estimates
Paylocity Holding recorded first-quarter fiscal 2021 non-GAAP earnings of 38 cents per share, outpacing the Zacks Consensus Estimate of 15 cents. Moreover, the bottom-line figure comes in a couple of cents higher than the year-ago quarter’s earnings of 36 cents per share.
Paylocity’s revenues of $135.8 million improved 7% year over year and also trumped the Zacks Consensus Estimate of $133.9 million. The top line was driven by an 11% rise in recurring revenues (99% of total revenues), which totaled $134.9 million. However, interest income on funds held for clients slumped 81% to $919 million.
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. However, lower interest rates have been negatively impacting the company’s interest income on funds held for clients.
Quarter in Detail
The company’s non-GAAP gross profit came in at $94.2 million, up 4.3% year over year. Nonetheless, non-GAAP gross margin contracted 180 basis points (bps) year over year to 69.4%.
Adjusted EBITDA inched up 1.3% from the year-ago quarter to $30.8 million. Yet, adjusted EBITDA margin of 22.7% shrunk 140 bps.
Non-GAAP operating income marginally declined to $21.4 million from the $21.5 million reported in the year-ago quarter. Also, non-GAAP operating margin contracted 120 bps to 15.8%.
Paylocity exited the reported quarter with cash, cash equivalents and corporate investments of $240 million compared with the $285.4 million witnessed in the prior quarter. Additionally, as of Sep 30, 2020, the company had a long-term debt of $100 million.
During the fiscal first quarter, the company used $1.6 million of cash for operational activities.
For second-quarter fiscal 2021, Paylocity expects revenues of $141-$145 million, indicating 7-10% growth from the year-ago period. Adjusted EBITDA is projected in the band of $26.5-$29.5 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 5.88% due to these changes.
At this time, Paylocity has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Paylocity has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.