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Paylocity Holding Corporation PCTY shares gained 0.64% in after-hours trading on May 1 to $195.40 following the company’s third-quarter fiscal 2025 results.
PCTY reported third-quarter fiscal 2025 non-GAAP earnings of $2.43 per share, beating the Zacks Consensus Estimate by 16.27%. The bottom line increased 10% year over year, primarily driven by strong sales, operational execution and continued product differentiation.
PCTY’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 15.4%.
Paylocity’s revenues rose 13% year over year to $454.5 million and surpassed the Zacks Consensus Estimate by 2.82%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Paylocity Holding Corporation price-consensus-eps-surprise-chart | Paylocity Holding Corporation Quote
Top-line growth can be attributed to a 15% increase in Recurring and other revenues (92.7% of the total revenues) to $421.1 million. However, Interest income on funds held for clients (7.4% of total revenues) declined 2.9% year over year to $33.5 million.
Paylocity’s adjusted gross profit was $350.112 million, up 14.9% from the year-ago period. The adjusted gross margin expanded 110 basis points (bps) to 77%.
The non-GAAP operating income rose 18.4% year over year to $172.743 million. The non-GAAP operating margin expanded 160 bps to 38%.
Adjusted EBITDA rose 17.4% from the year-ago quarter to $197.056 million. The adjusted EBITDA margin for the third quarter of fiscal 2025 expanded 150 bps to 43.4%.
As of March 31, 2025, Paylocity’s cash and cash equivalents were $477.8 million compared with $482.4 million as of Dec. 31, 2024.
Long-term debt totaled $243.8 million as of the third quarter of fiscal 2025 due to borrowings under a credit facility to fund the acquisition of Airbase on Oct. 1, 2024, which reflects approximately $81.3 million repaid on the outstanding balance during the third quarter of fiscal 2025.
As of March 31, 2025, cash flow from operations for the first nine months of fiscal year 2025 was $331.7 million compared to cash flow from operations for the first six months of fiscal year 2025 was $145.7 million as of Dec 31,2024.
Raised optimism over an upbeat guidance is expected to drive the stock in the near term. For the fourth quarter of fiscal 2025, the company expects total revenues of $385.5-$390.5 million, indicating 9% growth from the year-ago period’s actual. Adjusted EBITDA is projected to be in the range of $118.7-$122.7 million.
For fiscal 2025, Paylocity projects total revenues between $1.58 billion and $1.585 billion, implying 13% growth from the year-ago quarter’s actual. Adjusted EBITDA is expected to be between $571 million and $575 million.
Currently, Paylocity carries a Zacks Rank #3 (Hold).
StoneCo STNE, Paycom Software PAYC and Affirm AFRM are some better-ranked stocks that investors can consider in the broader sector. Each stock presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
StoneCo shares have surged 76.2% year to date. STNE is set to report its first-quarter 2025 results on May 8.
Paycom Software shares are up 10.1% year to date. PAYC is slated to report its first-quarter 2025 results on May 7.
Affirm shares have plunged 18.3% year to date. AFRM is scheduled to report its fourth-quarter fiscal 2025 results on May 8.
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This article originally published on Zacks Investment Research (zacks.com).
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