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Paylocity (PCTY) Q1 Earnings & Revenues Top Estimates, Up Y/Y

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Paylocity Holding (PCTY - Free Report) reported first-quarter fiscal 2022 non-GAAP earnings of 59 cents per share, outpacing the Zacks Consensus Estimate of 37 cents. The bottom line increased 55.3% from the year-ago quarter’s earnings of 38 cents per share.

Paylocity’s revenues improved 34% year over year to $181.7 million and surpassed the Zacks Consensus Estimate of $174.2 million. The top-line growth can be attributed to a 34% increase in recurring revenues (99.5% of total revenues), which totaled $180.8 million. However, interest income on funds held for clients fell 5% to $0.9 million.

During the quarter under review, the company acquired Blue Marble, a leading global payroll provider, to offer its clients a unified solution to pay employees, automate processes and maintain compliance in over 150 nations globally.

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

Nevertheless, lower interest rates have been negatively impacting the company’s interest income on funds held for clients.

Quarterly Details

The company’s non-GAAP gross profit was $128.1 million, up 36% year over year. Non-GAAP gross margin expanded 110 basis points (bps) year over year to 70.5%.

Adjusted EBITDA increased 49.4% from the year-ago quarter to $46.1 million. However, adjusted EBITDA margin of 25.4% expanded 270 bps.

Non-GAAP operating income increased to $36.2 million from $21.4 million reported in the year-ago period. Also, non-GAAP operating margin expanded 410 bps to 19.9%.

Balance Sheet & Other Details

Paylocity exited the fiscal first quarter with cash, cash equivalents and corporate investments of $69.6 million compared with the previous quarter’s $208 million. Additionally, the company had no long-term debt outstanding as of Sep 30, 2021.

During the first quarter fiscal 2022, the company used $4.1 million of operating cash flow.

Outlook

For the fiscal second quarter, the company expects revenues of $185.5-$189.5 million, indicating 27-30% growth from the year-ago period. Adjusted EBITDA is projected in the band of $39-$42 million.

The company raised its fiscal 2022 guidance. It is now expecting revenues of $815-$820 million, suggesting approximately 29% growth from fiscal 2021, compared with the prior estimate of $790-$795 million.

Adjusted EBITDA is now expected in the band of $216-$220 million compared with the prior estimate of $209.5-$213.5 million for fiscal 2022.

Zacks Rank & Key Picks

Paylocity currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader computer and technology sector are Salesforce (CRM - Free Report) , which sports a Zacks Rank #1 (Strong Buy), while both Advanced Micro Devices (AMD - Free Report) and Adobe (ADBE - Free Report) carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rates for Salesforce, Advanced Micro Devices and Adobe are currently pegged at 16.8%, 46.2% and 19.1%, respectively.