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Paylocity Announces Second Quarter Fiscal Year 2024 Financial Results
المصدر: Nasdaq GlobeNewswire / 08 فبراير 2024 15:05:01 America/Chicago
- Q2 2024 Recurring & Other Revenue of $298.4 million, up 16% year-over-year
- Q2 2024 Total Revenue of $326.4 million, up 20% year-over-year
SCHAUMBURG, Ill, Feb. 08, 2024 (GLOBE NEWSWIRE) -- Paylocity Holding Corporation (Nasdaq: PCTY), a leading provider of cloud-based HCM and payroll software solutions, today announced financial results for the second quarter of fiscal year 2024, which ended December 31, 2023.
“Our differentiated value proposition of providing the most modern software in the industry continues to resonate in the marketplace as we saw total revenue growth of 20% and recurring revenue growth of 16% in Q2 of fiscal 24. We continue to receive positive client feedback on our modern product suite, including newer products such as Advanced Scheduling, Learning Management, Rewards & Recognition, and Employee Voice. We also extended our AI leadership in the HCM industry with the launch of AI-driven personalized learning plans, optimized workforce schedules, and embedded generative AI within Rewards & Recognition and Performance Management to improve communication between employees and their managers. Paylocity’s commitment to product innovation was also recently recognized with the Bronze Brandon Hall Group Excellence in Technology Award in the Best Advance in Employee Engagement Technology category, and we were named an overall leader in 10 HCM product categories in G2’s Winter 2023 Grid Reports, marking the 21st consecutive quarter in which Paylocity achieved leader ranking,” said Steve Beauchamp, Co-Chief Executive Officer of Paylocity.
Second Quarter Fiscal 2024 Financial Highlights
Revenue:
- Total revenue was $326.4 million, an increase of 20% from the second quarter of fiscal year 2023.
- Recurring & other revenue was $298.4 million, an increase of 16% from the second quarter of fiscal year 2023.
Operating Income:
- GAAP operating income was $49.7 million and non-GAAP operating income was $92.8 million in the second quarter of fiscal year 2024.
Net Income:
- GAAP net income was $38.1 million or $0.67 per share in the second quarter of fiscal year 2024 based on 56.9 million diluted weighted average common shares outstanding.
Adjusted EBITDA:
- Adjusted EBITDA, a non-GAAP measure, was $112.6 million in the second quarter of fiscal year 2024.
Balance Sheet and Cash Flow:
- Cash and cash equivalents totaled $366.9 million as of the second quarter of fiscal year 2024.
- Cash flow from operations for the first six months of fiscal year 2024 was $137.2 million compared to $78.8 million for the first six months of fiscal year 2023.
- As of December 31, 2023, Paylocity had no long-term debt and had not drawn on its credit facility.
A reconciliation of GAAP to non-GAAP financial measures has been provided in this press release, including the accompanying tables. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”
Business Outlook
Based on information available as of February 8, 2024, Paylocity is issuing guidance for the third quarter and full fiscal year 2024 as indicated below.
Third Quarter 2024:
- Total revenue is expected to be in the range of $395.0 million to $399.0 million, which represents approximately 17% growth over fiscal year 2023 third quarter total revenue.
- Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $153.5 million to $156.5 million.
Fiscal Year 2024:
- Total revenue is expected to be in the range of $1.384 billion to $1.389 billion, which represents approximately 18% growth over fiscal year 2023 total revenue.
- Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $474.0 million to $478.0 million.
We are unable to reconcile forward-looking non-GAAP Adjusted EBITDA to its directly comparable GAAP financial measure because the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort.
Conference Call Details
Paylocity will host a conference call to discuss its second quarter fiscal year 2024 results at 4:30 p.m. Central Time today (5:30 p.m. Eastern Time). A live audio webcast of the conference call along with detailed financial information can be accessed through https://investors.paylocity.com/events-and-presentations where dial in details are provided. A replay of the call will be available and archived via webcast at https://investors.paylocity.com/.About Paylocity
Paylocity is a leading provider of cloud-based HCM and payroll software solutions headquartered in Schaumburg, IL. Founded in 1997 and publicly traded since 2014, Paylocity offers an intuitive, easy-to-use product suite that helps businesses tackle today’s challenges while moving them toward the promise of tomorrow. Known for its unique culture and consistently recognized as one of the best places to work, Paylocity accompanies its clients on the journey to create great workplaces and help people achieve their best through automation, data-driven insights, and engagement. For more information, visit www.paylocity.com.
Non-GAAP Financial Measures
The company uses certain non-GAAP financial measures when reporting its financial results, including Adjusted EBITDA, Adjusted EBITDA margin, adjusted gross profit, adjusted gross profit margin, non-GAAP operating income, non-GAAP net income, non-GAAP net income per share, non-GAAP sales and marketing and non-GAAP sales and marketing margin, non-GAAP total research and development and non-GAAP total research and development margin, non-GAAP general and administrative and non-GAAP general and administrative margin, free cash flow and free cash flow margin, certain of which are included in this release. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. We define Adjusted EBITDA as net income (loss) before interest expense, income tax expense (benefit), and depreciation and amortization expense, adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and other items as described later in this release. We calculate Adjusted EBITDA margin as adjusted EBITDA as described in the preceding sentence divided by total revenues. Adjusted gross profit is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and amortization of capitalized internal-use software costs and certain acquired intangibles. Adjusted gross profit margin is calculated as adjusted gross profit as described in the preceding sentence divided by total revenues. Non-GAAP operating income is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, the amortization of acquired intangibles and other items as described later in this release. Non-GAAP sales and marketing expense is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and other items as described later in this release. Non-GAAP sales and marketing margin is calculated by dividing non-GAAP sales and marketing by total revenues. Non-GAAP general and administrative expense is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, the amortization of certain acquired intangibles and other items as described later in this release. Non-GAAP general and administrative margin is calculated by dividing non-GAAP general and administrative margin by total revenues. Non-GAAP net income and non-GAAP net income per share are adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, the amortization of acquired intangibles and other items as described later in this release, including the income tax effect on these items. Non-GAAP total research and development is adjusted for capitalized internal-use software costs paid and to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and other items as described later in this release. Non-GAAP total research and development margin is calculated by dividing non-GAAP total research and development by total revenues. Free cash flow is defined as net cash provided by operating activities less capitalized internal-use software costs, purchase of property and equipment and lease allowances used for tenant improvements. Free cash flow margin is calculated by dividing free cash flow as defined in the preceding sentence divided by total revenues. Please note that other companies may define their non-GAAP financial measures differently than we do. Management presents certain non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance. Management uses these non-GAAP financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. Management also intends to provide these non-GAAP financial measures as part of the company’s future earnings discussions and, therefore, the inclusion of the non-GAAP financial measures should provide consistency in the company’s financial reporting. Non-GAAP financial measures have limitations as an analytical tool. Investors are encouraged to review the reconciliation of the non-GAAP measures to their most directly comparable GAAP measures provided in this release.
Safe Harbor/Forward Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included herein regarding Paylocity’s future operations, ability to scale its business, future financial position and performance, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “seek” and similar expressions (or the negative of these terms) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about management's estimates regarding future revenues and financial performance, long-term financial targets and other statements about management’s beliefs, intentions or goals. Paylocity may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on Paylocity’s forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements, including, but not limited to the general economic conditions in regions in which Paylocity does business, changes in interest rates, business disruptions, reductions in employment and an increase in business failures that have occurred or may occur in the future; Paylocity’s ability to leverage AI Assist and other forms of artificial intelligence and machine learning in its technology, which may be constrained by current and future laws, regulations, interpretive positions or standards governing new and evolving technologies and ethical considerations that could restrict or impose burdensome and costly requirements on its ability to continue to leverage data in innovative ways; Paylocity’s ability to retain existing clients and to attract new clients to enter into subscriptions for its services; the challenges associated with a growing company’s ability to effectively service clients in a dynamic and competitive market; challenges associated with expanding and evolving a sales organization to effectively address new geographies and products and services; challenges related to cybersecurity threats and evolving cybersecurity regulations; Paylocity’s reliance on and ability to expand its referral network of third parties; Paylocity’s reliance on third party payroll partners in foreign jurisdictions in its Blue Marble business; difficulties associated with accurately forecasting revenue and appropriately planning expenses; challenges with managing growth effectively; risks related to regulatory, legislative and judicial uncertainty in Paylocity’s markets; Paylocity’s ability to protect and defend its intellectual property; the risk that Paylocity’s security measures are compromised or a threat actor gains unauthorized access to customer data; unexpected events in the market for Paylocity’s solutions; changes in the competitive environment in Paylocity’s industry and the markets in which it operates; adverse changes in general economic or market conditions; changes in the employment rates of Paylocity’s clients and the resultant impact on revenue; the possibility that Paylocity may be adversely affected by other economic, business, and/or competitive factors; and other risks and potential factors that could affect Paylocity’s business and financial results identified in Paylocity’s filings with the Securities and Exchange Commission (the “SEC”), including its 10-K filed with the SEC on August 4, 2023. Additional information will also be set forth in Paylocity’s future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that Paylocity makes with the SEC. These forward-looking statements represent Paylocity’s expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Paylocity disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.PAYLOCITY HOLDING CORPORATION
Unaudited Consolidated Balance Sheets
(in thousands, except per share data)June 30,
2023December 31,
2023Assets Current assets: Cash and cash equivalents $ 288,767 $ 366,904 Accounts receivable, net 25,085 32,476 Deferred contract costs 78,109 87,065 Prepaid expenses and other 35,061 48,517 Total current assets before funds held for clients 427,022 534,962 Funds held for clients 2,621,415 3,271,736 Total current assets 3,048,437 3,806,698 Capitalized internal-use software, net 86,127 103,281 Property and equipment, net 64,069 63,150 Operating lease right-of-use assets 44,067 37,441 Intangible assets, net 34,527 32,466 Goodwill 102,054 109,558 Long-term deferred contract costs 294,222 317,915 Long‑term prepaid expenses and other 6,331 5,567 Deferred income tax assets 15,846 16,644 Total assets $ 3,695,680 $ 4,492,720 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 6,153 $ 7,973 Accrued expenses 143,287 147,121 Total current liabilities before client fund obligations 149,440 155,094 Client fund obligations 2,625,355 3,267,771 Total current liabilities 2,774,795 3,422,865 Long-term operating lease liabilities 62,471 50,963 Other long-term liabilities 3,731 4,177 Deferred income tax liabilities 11,820 27,942 Total liabilities $ 2,852,817 $ 3,505,947 Stockholders’ equity: Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2023 and December 31, 2023 $ — $ — Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2023 and December 31, 2023; 55,912 shares issued and outstanding at June 30, 2023 and 56,313 shares issued and outstanding at December 31, 2023 56 56 Additional paid-in capital 380,632 446,860 Retained earnings 466,690 539,323 Accumulated other comprehensive income (loss) (4,515 ) 534 Total stockholders' equity $ 842,863 $ 986,773 Total liabilities and stockholders’ equity $ 3,695,680 $ 4,492,720 PAYLOCITY HOLDING CORPORATION
Unaudited Consolidated Statements of Operations and Comprehensive Income
(in thousands, except per share data)Three Months Ended
December 31,Six Months Ended
December 31,2022 2023 2022 2023 Revenues: Recurring and other revenue $ 256,434 $ 298,416 $ 501,840 $ 590,101 Interest income on funds held for clients 16,574 27,945 24,448 53,846 Total revenues 273,008 326,361 526,288 643,947 Cost of revenues 90,076 107,399 174,619 208,866 Gross profit 182,932 218,962 351,669 435,081 Operating expenses: Sales and marketing 75,694 79,777 146,757 160,180 Research and development 41,029 46,139 81,122 90,744 General and administrative 48,001 43,340 98,493 93,262 Total operating expenses 164,724 169,256 326,372 344,186 Operating income 18,208 49,706 25,297 90,895 Other income (expense) (5 ) 3,800 (168 ) 7,025 Income before income taxes 18,203 53,506 25,129 97,920 Income tax expense (benefit) 2,603 15,390 (20,823 ) 25,287 Net income $ 15,600 $ 38,116 $ 45,952 $ 72,633 Other comprehensive income (loss), net of tax 516 4,929 (1,856 ) 5,049 Comprehensive income $ 16,116 $ 43,045 $ 44,096 $ 77,682 Net income per share: Basic $ 0.28 $ 0.68 $ 0.83 $ 1.29 Diluted $ 0.28 $ 0.67 $ 0.81 $ 1.28 Weighted-average shares used in computing net income per share: Basic 55,721 56,244 55,587 56,140 Diluted 56,474 56,855 56,559 56,906
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises for each of the three and six months ended December 31, are included in the above line items:Three Months Ended
December 31,Six Months Ended
December 31,2022 2023 2022 2023 Cost of revenues $ 5,310 $ 5,639 $ 10,355 $ 11,241 Sales and marketing 10,871 10,156 21,371 20,027 Research and development 11,472 11,565 21,706 22,435 General and administrative 16,328 16,502 35,527 32,135 Total stock-based compensation expense and employer payroll taxes related to stock releases and option exercises $ 43,981 $ 43,862 $ 88,959 $ 85,838 PAYLOCITY HOLDING CORPORATION
Unaudited Consolidated Statements of Cash Flows
(in thousands)Six Months Ended
December 31,2022 2023 Cash flows from operating activities: Net income $ 45,952 $ 72,633 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation expense 83,364 82,213 Depreciation and amortization expense 29,094 35,501 Deferred income tax expense (benefit) (20,856 ) 15,225 Provision for credit losses 602 463 Net accretion of discounts on available-for-sale securities (2,039 ) (2,683 ) Other 1,410 (3,870 ) Changes in operating assets and liabilities: Accounts receivable (9,377 ) (7,052 ) Deferred contract costs (40,638 ) (30,743 ) Prepaid expenses and other 616 (11,328 ) Accounts payable (392 ) 1,131 Accrued expenses and other (8,979 ) (14,278 ) Net cash provided by operating activities 78,757 137,212 Cash flows from investing activities: Purchases of available-for-sale securities (296,060 ) (164,815 ) Proceeds from sales and maturities of available-for-sale securities 190,253 150,851 Capitalized internal-use software costs (19,740 ) (29,483 ) Purchases of property and equipment (6,663 ) (6,142 ) Acquisitions of businesses, net of cash acquired — (12,015 ) Other investing activities 29 (583 ) Net cash used in investing activities (132,181 ) (62,187 ) Cash flows from financing activities: Net change in client fund obligations (922,079 ) 642,416 Proceeds from employee stock purchase plan 8,450 9,534 Taxes paid related to net share settlement of equity awards (79,369 ) (35,390 ) Other financing activities (864 ) 13,356 Net cash provided by (used in) financing activities (993,862 ) 629,916 Net change in cash, cash equivalents and funds held for clients' cash and cash equivalents (1,047,286 ) 704,941 Cash, cash equivalents and funds held for clients' cash and cash equivalents—beginning of period 3,793,453 2,421,312 Cash, cash equivalents and funds held for clients' cash and cash equivalents—end of period $ 2,746,167 $ 3,126,253 Supplemental Disclosure of Non-Cash Investing and Financing Activities Purchases of property and equipment, accrued but not paid $ — $ 3,422 Liabilities assumed for acquisitions $ 117 $ 382 Supplemental Disclosure of Cash Flow Information Cash paid for interest $ 157 $ 247 Cash paid (refunds received) for income taxes $ (158 ) $ 25,561 Reconciliation of cash, cash equivalents and funds held for clients' cash and cash equivalents to the Consolidated Balance Sheets Cash and cash equivalents $ 120,053 $ 366,904 Funds held for clients' cash and cash equivalents 2,626,114 2,759,349 Total cash, cash equivalents and funds held for clients' cash and cash equivalents $ 2,746,167 $ 3,126,253 Paylocity Holding Corporation
Reconciliation of GAAP to non-GAAP Financial Measures
(In thousands except per share data)Three Months Ended
December 31,Six Months Ended
December 31,2022 2023 2022 2023 Reconciliation from Gross profit to Adjusted gross profit: Gross profit $ 182,932 $ 218,962 $ 351,669 $ 435,081 Amortization of capitalized internal-use software costs 7,478 10,676 14,520 20,211 Amortization of certain acquired intangibles 1,853 1,853 3,707 3,707 Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 5,310 5,639 10,355 11,241 Other items (1) — — 19 — Adjusted gross profit $ 197,573 $ 237,130 $ 380,270 $ 470,240 Three Months Ended
December 31,Six Months Ended
December 31,2022 2023 2022 2023 Reconciliation from Operating income to Non-GAAP Operating income: Operating income $ 18,208 $ 49,706 $ 25,297 $ 90,895 Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 43,981 43,862 88,959 85,838 Amortization of acquired intangibles 2,770 2,525 5,541 5,061 Other items (2) 151 (3,328 ) 416 (2,143 ) Non-GAAP Operating income $ 65,110 $ 92,765 $ 120,213 $ 179,651 Three Months Ended
December 31,Six Months Ended
December 31,2022 2023 2022 2023 Reconciliation from Net income to Non-GAAP Net income: Net income $ 15,600 $ 38,116 $ 45,952 $ 72,633 Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 43,981 43,862 88,959 85,838 Amortization of acquired intangibles 2,770 2,525 5,541 5,061 Other items (2) 151 (3,328 ) 416 (2,143 ) Income tax effect on adjustments (3) 496 3,294 (22,439 ) 2,464 Non-GAAP Net income $ 62,998 $ 84,469 $ 118,429 $ 163,853 Three Months Ended
December 31,Six Months Ended
December 31,2022 2023 2022 2023 Calculation of Non-GAAP Net income per share: Non-GAAP Net income $ 62,998 $ 84,469 $ 118,429 $ 163,853 Diluted weighted-average number of common shares 56,474 56,855 56,559 56,906 Non-GAAP Net income per share $ 1.12 $ 1.49 $ 2.09 $ 2.88 Three Months Ended
December 31,Six Months Ended
December 31,2022 2023 2022 2023 Reconciliation from Net income to Adjusted EBITDA: Net income $ 15,600 $ 38,116 $ 45,952 $ 72,633 Interest expense 190 189 377 379 Income tax expense (benefit) 2,603 15,390 (20,823 ) 25,287 Depreciation and amortization expense 14,827 18,380 29,094 35,501 EBITDA 33,220 72,075 54,600 133,800 Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 43,981 43,862 88,959 85,838 Other items (2) 151 (3,328 ) 416 (2,143 ) Adjusted EBITDA $ 77,352 $ 112,609 $ 143,975 $ 217,495 Three Months Ended
December 31,Six Months Ended
December 31,2022 2023 2022 2023 Reconciliation of Non-GAAP sales and marketing: Sales and marketing $ 75,694 $ 79,777 $ 146,757 $ 160,180 Less: Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 10,871 10,156 21,371 20,027 Less: Other items (1) — — 22 — Non-GAAP sales and marketing $ 64,823 $ 69,621 $ 125,364 $ 140,153 Three Months Ended
December 31,Six Months Ended
December 31,2022 2023 2022 2023 Reconciliation of Non-GAAP total research and development: Research and development $ 41,029 $ 46,139 $ 81,122 $ 90,744 Add: Capitalized internal-use software costs 9,787 15,290 19,740 29,483 Less: Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 11,472 11,565 21,706 22,435 Less: Other items (4) 151 138 369 360 Non-GAAP total research and development $ 39,193 $ 49,726 $ 78,787 $ 97,432 Three Months Ended
December 31,Six Months Ended
December 31,2022 2023 2022 2023 Reconciliation of Non-GAAP general and administrative: General and administrative $ 48,001 $ 43,340 $ 98,493 $ 93,262 Less: Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 16,328 16,502 35,527 32,135 Less: Amortization of certain acquired intangibles 917 672 1,834 1,354 Less: Other items (2) — (3,466 ) 6 (2,503 ) Non-GAAP general and administrative $ 30,756 $ 29,632 $ 61,126 $ 62,276 Six Months Ended
December 31,2022 2023 Reconciliation of Free Cash Flow: Net cash provided by operating activities $ 78,757 $ 137,212 Capitalized internal-use software costs (19,740 ) (29,483 ) Purchases of property and equipment (6,663 ) (6,142 ) Free Cash Flow $ 52,354 $ 101,587
(1) Represents acquisition-related costs.(2) Represents acquisition and other nonrecurring transaction-related costs and lease exit activity.
(3) Includes the income tax effect on non-GAAP net income adjustments related to stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, amortization of acquired intangibles and other items, which include acquisition and other nonrecurring transaction-related costs and lease exit activity.
(4) Represents acquisition and other nonrecurring transaction-related costs.
Contact:
Ryan Glenn
investors@paylocity.com
www.paylocity.com