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Paylocity (PCTY) Q2 Earnings and Revenues Beat Estimates

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Paylocity Holding (PCTY - Free Report) reported second-quarter fiscal 2022 non-GAAP earnings of 64 cents per share, outpacing the Zacks Consensus Estimate of 41 cents. The bottom line improved 64.1% from the year-ago quarter’s earnings of 39 cents per share.

Paylocity’s revenues improved 34% year over year to $196 million and surpassed the Zacks Consensus Estimate of $187.9 million. The top-line growth can be attributed to a 34% increase in recurring revenues (99.5% of total revenues), which totaled $195 million. However, interest income on funds held for clients rose 6.4% to $1 million.

Quarterly Details

Paylocity’s non-GAAP gross profit was $134.7 million, up 33.8% year over year. Non-GAAP gross margin contracted 10 basis points (bps) year over year to 68.7%.

Adjusted EBITDA increased 33.3% from the year-ago quarter to $46.6 million. However, adjusted EBITDA margin of 23.8% contracted 10 bps.

Non-GAAP operating income increased to $36.6 million from $25.1 million reported in the year-ago period. Non-GAAP operating margin expanded 150 bps to 18.7%.

Balance Sheet & Other Details

Paylocity exited the fiscal second quarter with cash and cash equivalents of $84.1 million compared with the previous quarter’s $66.4 million. As of Dec 31, 2021, the company had no long-term debt.

During the second quarter of fiscal 2022, the company generated $31 million of cash through operating activities.

Outlook Update

For the fiscal third quarter, Paylocity expects revenues of $239-$243 million, indicating approximately 30% growth from the year-ago period. Adjusted EBITDA is projected to be $77-$80 million.

The company raised its fiscal 2022 guidance. It is now expecting revenues of $829-$834 million, suggesting approximately 31% growth from fiscal 2021, compared with the prior estimate of $815-$820 million.

Adjusted EBITDA is now expected in the band of $220-$224 million compared with the prior estimate of $216-$220 million for fiscal 2022.

Zacks Rank & Other Key Picks

Paylocity currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks from the broader computer and technology sector include the iPhone maker Apple (AAPL - Free Report) , sporting a Zacks Rank #1 (Strong Buy), Analog Devices (ADI - Free Report) and Axcelis Technologies (ACLS - Free Report) , both carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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