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Paylocity (PCTY) Q1 Earnings and Revenues Surpass Estimates

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Paylocity Holding Corporation (PCTY - Free Report) reported first-quarter fiscal 2024 non-GAAP earnings of $1.4 per share, outpacing the Zacks Consensus Estimate of $1.09. The bottom line improved 28.4% from the year-ago quarter’s earnings of 98 cents per share, driven by higher revenues and an increase in the gross and operating margins.

Paylocity’s revenues increased 25.4% year over year to $317.5 million and surpassed the Zacks Consensus Estimate by 0.32%. 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 an 18.9% increase in Recurring revenues (91.8% of the total revenues), which totaled $291.6 million. Moreover, the Interest Income on Funds Held for Clients (8.2% of total revenues) increased to $25.9 million from approximately $7.87 million in the year-ago quarter. Our revenue estimates for Recurring and Interest Income on Funds Held for Clients were pegged at $249.2 million and $67 million, respectively.

Quarterly Details

Paylocity’s adjusted gross profit was $233.1 million, up 27.6% year over year. The adjusted gross margin expanded 130 basis points (bps) year over year to 73.4%.

The non-GAAP operating income increased 57.7% year over year to $86.8 million from the $55.1 million reported in the year-ago period. The non-GAAP operating margin expanded 560 bps to 27.4%.

Adjusted EBITDA increased 57.4% from the year-ago quarter to $104.8 million. The adjusted EBITDA margin of 33% expanded 670 bps.

Balance Sheet & Other Details

Paylocity exited the fiscal first quarter of 2024 with cash and cash equivalents of $305 million compared with the previous quarter’s $288.8 million. As of Sep 30, 2023, Paylocity had no long-term debt and it had not drawn on its credit facility.

During first-quarter fiscal 2024, Paylocity generated an operating cash flow of $62.1 million and a free cash flow of $44.4 million.

Second-Quarter and Fiscal 2024 Guidance

For the second quarter of fiscal 2024, PCTY expects revenues in the band of $322.5-$326.5 million, indicating approximately 19% growth from the year-ago period. Adjusted EBITDA is projected in the band of $100-$103 million.

For fiscal 2024, the company projects revenues between $1.405 billion and $1.410 billion, representing approximately 20% growth over fiscal 2023. Adjusted EBITDA is expected in the band of $474-$478 million.

Zacks Rank & Other Stocks to Consider

Currently, Paylocity flaunts a Zacks Rank #1 (Strong Buy). Shares of PCTY have declined 22.6% year to date (YTD).

Some other top-ranked stocks from the broader Computer and Technology sector are Palo Alto Networks (PANW - Free Report) , NVIDIA Corporation (NVDA - Free Report) and Splunk (SPLK - Free Report) .

Palo Alto and NVIDIA each sport a Zacks Rank #1, while Splunk carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Palo Alto Networks' first-quarter fiscal 2024 earnings has remained unchanged at $1.28 per share in the past 60 days. For fiscal 2024, earnings estimates have remained unchanged at $5.34 per share in the past 60 days.

Palo Alto Networks’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 22.2%. Shares of PANW have surged 79.4% YTD.

The Zacks Consensus Estimate for NVIDIA’s third-quarter fiscal 2024 earnings has been revised a penny northward to $2.10 per share in the past 60 days. For fiscal 2024, earnings estimates have moved 7 cents upward to $10.74 per share in the past 30 days.

NVIDIA’s earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing on one occasion, the average surprise being 9.8%. Shares of NVDA have rallied 197.7% YTD.

The Zacks Consensus Estimate for Splunk's third-quarter fiscal 2024 earnings has been revised upward by 4 cents to 46 cents per share in the past 60 days. For fiscal 2024, earnings estimates have moved upward by 2 cents to $3.78 per share in the past 60 days.

Splunk’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 154.9%. Shares of SPLK have risen 70.5% YTD.

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