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Paylocity (PCTY) Enriches Product Suite With Cloudsnap Buyout

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Paylocity Holding Corporation (PCTY - Free Report) recently announced the acquisition of Austin, TX-based software company, Cloudsnap, for an undisclosed amount. The acquisition will further expand the product portfolio of the cloud-based human resource (HR) and payroll software solutions provider.

Cloudsnap provides the integration platform as a service that allows organizations to connect cloud and legacy applications to automate their businesses. The company’s integration automation platform facilitates the development and deployment of application programming interface integrations and ensures data integrity across those applications.

Therefore, the acquisition of Cloudsnap will help Paylocity in delivering modern integrations and seamless data sharing solutions to organizations, thereby helping them combine and automate business processes across the HR, finance, benefits and other systems.

“Legacy HCM vendors have not designed their systems to support end-to-end processes and data flows across third-party systems, yet HR touches virtually every part of an organization,” said CEO of Paylocity, Steve Beauchamp. “This acquisition will accelerate the speed and flexibility with which organizations can connect data and insights from Paylocity to other mission-critical business applications, so we can continue to provide the most relevant and modern platform for our clients.”

Paylocity anticipates the Cloudsnap acquisition to have an immaterial impact on its third-quarter fiscal 2022 financial results.

Enhancing Product Portfolio Through Acquisitions

Paylocity makes frequent investments in businesses, software solutions and technologies that it deems complementary to the company’s business through acquisitions and strategic collaborations. Over the last three years, the company has acquired four businesses.

In September 2021, PCTY acquired Blue Marble Payroll, which provides international payroll solutions. With its platform, the company provides U.S.-based companies to manage payroll processes for employees recruited outside the United States in accordance with local and country-specific requirements.

In November 2020, it announced acquiring Samepage, an all-in-one team collaboration solution provider. With this takeover, Paylocity expanded its product functionality by offering digital collaboration tools, including file sharing, task management and real-time document collaboration.

In April 2020, Paylocity announced the acquisition of the video-sharing tech startup — VidGrid — for an undisclosed amount. The acquisition helped the HR and payroll software solution provider enhance its capabilities in the video communication space.

The acquisition of BeneFLEX in March 2018, enriched Paylocity’s product suite with a host of administration-related solutions. BeneFLEX manages employee-benefit-related plans, including the likes of health savings accounts, health reimbursement accounts, flexible spending accounts for Midwest and California-based mid-market clients.

Enhanced offerings via the integration of the solutions suite of acquired entities will be lucrative for customers, consequently proving to be a top-line driver going ahead.

Paylocity’s Solutions Gaining Traction

Paylocity is performing well backed by the robust performance of its human capital management (“HCM”) product suite, which has resulted in new client additions and existing client growth. The company is benefiting from an accelerated market penetration of low implementation cost-based HCM products, which is driving its revenues as well as margins.

Driven by strong demand for the company’s solutions, revenues of first-quarter fiscal 2022 came in at $181.7 million, reflecting an increase of 34% on a year-over-year basis. Its gross, adjusted EBITDA and operating margins improved 110 basis points (bps), 270 bps and 410 bps, respectively, on a year-over-year basis during the first quarter.

Buoyed by its continued strong quarterly performances, Paylocity is encouraged to invest further in sales & marketing, research & development and new employee hiring initiatives in the near term. These initiatives will boost the better penetration of the products.

Zacks Rank & Stocks to Consider

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

Some other top-ranked stocks from the broader technology sector include Broadcom (AVGO - Free Report) , Apple (AAPL - Free Report) and Jabil (JBL - Free Report) . While Broadcom and Apple each sport a Zacks Rank #1 (Strong Buy), Jabil carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Broadcom’s first-quarter fiscal 2022 earnings has been revised upward by 8.1% to $8.15 per share over the past 60 days. For fiscal 2022, earnings estimates have moved upward by 6.5% to $33.03 per share over the past 60 days.

Broadcom’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 1.4%. Shares of AVGO have rallied 25.1% in the trailing 12 months.

The Zacks Consensus Estimate for Apple’s first-quarter fiscal 2022 earnings has been revised upward by a couple of cents to $1.89 per share over the past 60 days. For fiscal 2022, earnings estimates have moved upward by three cents to $5.82 per share in the past 30 days.

Apple’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while meeting the same on one occasion, the average surprise being 22.3%. AAPL stock has rallied 28.6% over the past year.

The Zacks Consensus Estimate for Jabil’s second-quarter fiscal 2022 earnings has been revised upward to $1.47 per share from $1.42 60 days ago. For fiscal 2022, earnings estimates have been revised upward by 25 cents to $6.58 per share in the past 60 days.

Jabil’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 18.1%. Shares of JBL have rallied 51.6% over the past year.


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