A month has gone by since the last earnings report for Paylocity Holding Corporation (PCTY - Free Report) . Shares have added about 18.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Paylocity Q3 Earnings and Revenues Increase Y/Y
Paylocity reported third-quarter of fiscal 2017 non-GAAP earnings of $0.40 per share compared with $0.21 reported in the year-ago quarter.
On a GAAP basis, Paylocity posted earnings of $0.27 per share compared with $0.12 per share reported in the year-ago quarter.
The company’s revenues came in at $90.3 million, beating the Zacks Consensus Estimate of $88 million. Revenues also increased 27.9% year over year driven by new client addition and existing client growth.
The top line was also backed by a 29% surge in recurring revenues (96% of total revenue) and a 12.3% increase in implementation and other revenues.
The company’s gross margin expanded 310 basis points (bps) year over year to 64.6%, primarily due to higher revenue base.
Paylocity reported operating income of $14.9 million, higher than $6.2 million reported in the year-ago quarter. Operating margin came in at 16.5% compared with 8.8% reported in the year-ago quarter. Consequently, net income during the quarter was $14.8 million compared with $6.2 million in the year-ago period.
Paylocity exited the quarter with cash and cash equivalents of $101.5 million compared with $82.2 million in the previous quarter. Receivables were $2.2 million compared with $2.1 million in the previous quarter.
Paylocity has no long-term debt. The company generated $27.9 million of cash flow from operational activities during the quarter.
The company provided outlook for the fourth-quarter and raised its fiscal 2017 guidance. For the fourth quarter of fiscal 2017, Paylocity expects revenues in the range of $73.1–$74.1 million. Adjusted EBITDA is projected in the band of $5.3–$6.3 million. Non-GAAP earnings per share are expected to be in the range of $0.00–$0.02.
For fiscal 2017, Paylocity anticipates revenues in the range of $297–$298 million (previously $296–$298 million). Adjusted EBITDA is now projected in the range of $50–$51 million (previously $42–$43 million). Non-GAAP earnings per share are now expected within $0.57–$0.59 (previously $0.41–$0.43).
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Paylocity's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'F'. The stock was allocated a grade of 'F' on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is solely suitable for growth investors.
The stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.