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Paylocity (PCTY) Q1 Earnings Miss Estimates, Revenues Top

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Paylocity Holding (PCTY - Free Report) reported mixed fiscal first-quarter 2019 results, wherein the top line beat estimates but the bottom line missed the same.

The company reported non-GAAP earnings of 20 cents per share, which missed the Zacks Consensus Estimate by a penny. The figure, however, increased 33.3% from the year-ago quarter.

Quarter Details

Paylocity’s revenues of $100.5 million increased 26% year over year and topped the Zacks Consensus Estimate of $98 million.

The top line was driven by a 25.8% rise in recurring revenues (99% of total revenues), which totaled $99.3 million. New client wins and a rise in average revenue per client, given the momentum of the company’s newest product offerings, drove results.

For the quarter, broker referrals represented more than 25% of new business. The company’s investment in the channel is aiding the number of brokers and helping to create stronger relationships with current partners.

However, a 52% decline in Implementation services and other revenues was a dampener.

Margins

The company’s non-GAAP gross profit came in at $70.4 million, up 37.7% year over year. Non-GAAP gross margin expanded 730 basis points year over year to 70%.

Paylocity Holding Corporation Price, Consensus and EPS Surprise

Paylocity Holding Corporation Price, Consensus and EPS Surprise | Paylocity Holding Corporation Quote

Adjusted EBITDA increased 59.4% from the year-ago quarter to $23.3 million.

Non-GAAP operating income was $15.3 million compared with $8.2 million a year ago.

Balance Sheet and Cash Flow

Paylocity exited the quarter with cash and cash equivalents of $63.7 million compared with $137.2 million in the previous quarter.

During the quarter, the company generated operating cash flow of $7.3 million compared with $8.2 million in the prior-year quarter.

Product Update

The company announced the addition of TPA solutions, which will be available in the first quarter of 2019. The addition of Health Savings Account and Flexible Spending Account is expected to provide “users with a single unified access point for payroll, HR and benefits administration” adds management.

Moreover, the company introduced new functionalities in HCM solutions. The company also launched a free additional self-service information resource called Paylocity Education and Knowledge or PEAK. It contains supplemental training materials and trending topics for payroll and HCM professionals, management stated.

Guidance

The company provided guidance for the second quarter and fiscal 2019. For the fiscal second quarter, Paylocity expects revenues in the range of $104-$105 million. Adjusted EBITDA is projected in the band of $23.5-$24.5 million.

For fiscal 2019, it now anticipates revenues in the range of $453-$455 million, up from $451-$453 million projected earlier.

Adjusted EBITDA guidance was maintained in the range of $126.5 million to $128.5 million.

Zacks Rank and Stocks to Consider

Paylocity currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader technology sector are Intel Corp. (INTC - Free Report) , Twitter, Inc. (TWTR - Free Report) and CACI International (CACI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Intel, Twitter and CACI International is projected to be 8.4%, 22.1% and 10%, respectively.

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