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Paylocity (PCTY) Soars 4% on Q2 Earnings Beat, Guidance Raise
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Paylocity Holding Corporation’s (PCTY - Free Report) shares rose 4.4% during Thursday’s extended trading session after the company reported better-than-expected second-quarter results and raised guidance for fiscal 2023.
The company reported second-quarter non-GAAP earnings of $1.12 per share, outpacing the Zacks Consensus Estimate of 70 cents. The bottom line improved a whopping 75% from the year-ago quarter’s earnings of 64 cents per share, mainly driven by higher revenues and an increase in gross and operating margins.
Paylocity’s revenues increased 39% year over year to $273 million and surpassed the Zacks Consensus Estimate of $259.8 million. The robust increase in the top line was mainly driven by better sales execution and sustained investments in technological upgrades and product innovation.
The top-line growth can be attributed to a 31% increase in recurring revenues (94% of the total revenues), which totaled $256.4 million. Moreover, the interest income on funds held for clients increased to $16.6 million from approximately $1 million in the year-ago quarter.
Paylocity Holding Corporation Price, Consensus and EPS Surprise
Paylocity’s adjusted gross profit was $197.6 million, up 46.7% year over year. The adjusted gross margin expanded 370 basis points (bps) year over year to 72.4%.
The non-GAAP operating income increased to $65.1 million from the $36.6 million reported in the year-ago period. The non-GAAP operating margin expanded 510 bps to 23.8%.
Adjusted EBITDA increased 65.9% from the year-ago quarter to $77.4 million. The adjusted EBITDA margin of 28.3% expanded 450 bps.
Balance Sheet & Other Details
Paylocity exited the fiscal second quarter with cash and cash equivalents of $120.1 million compared with the previous quarter’s $65.5 million. As of Dec 31, 2022, the company had long-term debt (long-term operating lease liabilities plus other long-term liabilities) of $68.7 million.
In the second quarter, Paylocity generated $62.4 million in cash through operating activities. During the first half of fiscal 2023, it generated operating cash flow of $78.8 million.
Raised FY23 Guidance
Buoyed by the stronger-than-expected second-quarter performance, Paylocity raised its guidance for fiscal 2023. The company now projects revenues between $1.156 and $1.161 billion in fiscal 2023, up from the earlier guidance range of $1.122-$1.127 billion.
Adjusted EBITDA is expected in the band of $358.5-$362.5 million instead of the previously guided range of $336-$340 million. For the third quarter of fiscal 2023, PCTY expects revenues in the band of $330.5-$334.5 million, indicating approximately 35% growth from the year-ago period. Adjusted EBITDA is projected in the band of $121.5-$124.5 million.
Some other top-ranked stocks from the broader technology sector are Clarivate Plc (CLVT - Free Report) , CDW Corporation (CDW - Free Report) and ServiceNow (NOW - Free Report) . Clarivate sports a Zacks Rank #1 at present, while CDW and ServiceNow each carry a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Clarivate’s first-quarter 2023 earnings has remained unchanged at 17 cents per share over the past 60 days. For 2023, earnings estimates have been revised a penny northward to 80 cents per share in the past 30 days.
Clarivate's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 9.4%. Shares of CLVT have fallen 21.1% in the trailing 12 months.
The Zacks Consensus Estimate for CDW's fourth-quarter 2022 earnings has remained unchanged at $2.45 per share over the past 60 days. For 2022, earnings estimates have remained unchanged at $9.75 per share in the past 60 days.
CDW’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 6.6%. Shares of the company have increased 5.1% over the past year.
The Zacks Consensus Estimate for ServiceNow's first-quarter 2023 earnings has been revised southward by 4 cents to $2.01 per share over the past 30 days. For 2023, earnings estimates have moved upward by 10 cents to $9.17 per share in the past seven days.
ServiceNow's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6.9%. Shares of NOW have plunged 14.9% in the trailing 12 months.
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Paylocity (PCTY) Soars 4% on Q2 Earnings Beat, Guidance Raise
Paylocity Holding Corporation’s (PCTY - Free Report) shares rose 4.4% during Thursday’s extended trading session after the company reported better-than-expected second-quarter results and raised guidance for fiscal 2023.
The company reported second-quarter non-GAAP earnings of $1.12 per share, outpacing the Zacks Consensus Estimate of 70 cents. The bottom line improved a whopping 75% from the year-ago quarter’s earnings of 64 cents per share, mainly driven by higher revenues and an increase in gross and operating margins.
Paylocity’s revenues increased 39% year over year to $273 million and surpassed the Zacks Consensus Estimate of $259.8 million. The robust increase in the top line was mainly driven by better sales execution and sustained investments in technological upgrades and product innovation.
The top-line growth can be attributed to a 31% increase in recurring revenues (94% of the total revenues), which totaled $256.4 million. Moreover, the interest income on funds held for clients increased to $16.6 million from approximately $1 million in the year-ago quarter.
Paylocity Holding Corporation Price, Consensus and EPS Surprise
Paylocity Holding Corporation price-consensus-eps-surprise-chart | Paylocity Holding Corporation Quote
Quarterly Details
Paylocity’s adjusted gross profit was $197.6 million, up 46.7% year over year. The adjusted gross margin expanded 370 basis points (bps) year over year to 72.4%.
The non-GAAP operating income increased to $65.1 million from the $36.6 million reported in the year-ago period. The non-GAAP operating margin expanded 510 bps to 23.8%.
Adjusted EBITDA increased 65.9% from the year-ago quarter to $77.4 million. The adjusted EBITDA margin of 28.3% expanded 450 bps.
Balance Sheet & Other Details
Paylocity exited the fiscal second quarter with cash and cash equivalents of $120.1 million compared with the previous quarter’s $65.5 million. As of Dec 31, 2022, the company had long-term debt (long-term operating lease liabilities plus other long-term liabilities) of $68.7 million.
In the second quarter, Paylocity generated $62.4 million in cash through operating activities. During the first half of fiscal 2023, it generated operating cash flow of $78.8 million.
Raised FY23 Guidance
Buoyed by the stronger-than-expected second-quarter performance, Paylocity raised its guidance for fiscal 2023. The company now projects revenues between $1.156 and $1.161 billion in fiscal 2023, up from the earlier guidance range of $1.122-$1.127 billion.
Adjusted EBITDA is expected in the band of $358.5-$362.5 million instead of the previously guided range of $336-$340 million. For the third quarter of fiscal 2023, PCTY expects revenues in the band of $330.5-$334.5 million, indicating approximately 35% growth from the year-ago period. Adjusted EBITDA is projected in the band of $121.5-$124.5 million.
Zacks Rank & Other Stocks to Consider
Currently, Paylocity sports a Zacks Rank #1 (Strong Buy). Shares of PCTY have gained 17% over the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
Some other top-ranked stocks from the broader technology sector are Clarivate Plc (CLVT - Free Report) , CDW Corporation (CDW - Free Report) and ServiceNow (NOW - Free Report) . Clarivate sports a Zacks Rank #1 at present, while CDW and ServiceNow each carry a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Clarivate’s first-quarter 2023 earnings has remained unchanged at 17 cents per share over the past 60 days. For 2023, earnings estimates have been revised a penny northward to 80 cents per share in the past 30 days.
Clarivate's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 9.4%. Shares of CLVT have fallen 21.1% in the trailing 12 months.
The Zacks Consensus Estimate for CDW's fourth-quarter 2022 earnings has remained unchanged at $2.45 per share over the past 60 days. For 2022, earnings estimates have remained unchanged at $9.75 per share in the past 60 days.
CDW’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 6.6%. Shares of the company have increased 5.1% over the past year.
The Zacks Consensus Estimate for ServiceNow's first-quarter 2023 earnings has been revised southward by 4 cents to $2.01 per share over the past 30 days. For 2023, earnings estimates have moved upward by 10 cents to $9.17 per share in the past seven days.
ServiceNow's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 6.9%. Shares of NOW have plunged 14.9% in the trailing 12 months.