Paylocity Holding 2025 Q3 Earnings Strong Performance as Net Income Grows 7.2%

Paylocity Holding (PCTY) reported its fiscal 2025 Q3 earnings on May 01st, 2025. The company exceeded market expectations with notable growth in both revenue and net income. paylocity also raised its guidance for the fiscal year, reflecting confidence in continued performance. The earnings report highlights robust financial growth and strategic initiatives that have positioned the company strongly for future success.

Revenue
Paylocity Holding's total revenue saw a 13.3% increase, reaching $454.55 million in Q3 2025 compared to $401.28 million in Q3 2024. Recurring and other revenue climbed to $421.10 million, while interest income on funds held for clients contributed $33.45 million. This growth underscores the company's strong sales execution and expanding market presence.

Earnings/Net Income
Paylocity's EPS rose by 8.6% to $1.64, up from $1.51 in the previous year, indicating robust earnings growth. The company achieved a net income of $91.48 million, representing a 7.2% increase from $85.31 million in Q3 2024. This record high for fiscal Q3 net income in 13 years demonstrates strong financial health, with an impressive EPS performance reflecting solid profitability.

Post-Earnings Price Action Review
Following the earnings report, Paylocity's stock price exhibited mixed results over various time frames. Short-term revenue metrics showed a 38.10% win rate for 3-day and 10-day periods, while the 30-day win rate improved to 57.14%. Investors betting on a revenue beat experienced a maximum return of 5.44%, observed on day 62 post-release. Net income and EPS win rates mirrored revenue trends, suggesting that longer-term investors had better chances for positive returns. Despite modest overall returns, investors are advised to maintain realistic expectations and consider a diversified investment strategy to manage risk effectively.

CEO Commentary
"Our solid results continued into the third quarter of fiscal 2025, with recurring revenue growth of 15%, total revenue growth of 13%, and increased revenue and profitability guidance for the fiscal year," said Toby Williams, President and Chief Executive Officer of Paylocity. He highlighted strong channel performance, noting that referrals from benefit brokers and financial advisors accounted for over 25% of new business in the quarter. Williams emphasized the company's commitment to investing in the broker channel to deliver value and support, while also mentioning the return of $150 million to shareholders through share repurchases.

Guidance
Paylocity is guiding for the fourth quarter of fiscal 2025, expecting recurring and other revenue to be in the range of $358.1 million to $363.1 million, representing approximately 11% growth year-over-year. Total revenue is anticipated to be between $385.5 million and $390.5 million, reflecting about 9% growth. For the full fiscal year 2025, the company expects recurring and other revenue of $1.460 billion to $1.465 billion, a projected 14% growth, and total revenue in the range of $1.580 billion to $1.585 billion, indicating approximately 13% growth. Adjusted EBITDA is expected to be between $571.0 million and $575.0 million.

Additional News
Recently, Paylocity completed the strategic acquisition of Airbase Inc., enhancing its product suite with spend management capabilities. This acquisition, finalized in October 2024, is expected to bolster Paylocity's position in the market, offering a more comprehensive solution to its clients. Furthermore, Paylocity announced a $150 million share repurchase program, reflecting confidence in its financial stability and commitment to returning value to shareholders. The company also received recognition from G2 and TrustRadius for its leadership in multiple HCM product categories, affirming its strong market presence and innovative offerings.

Ask Aime: What impact will Paylocity's Q3 earnings report have on its stock price and investor confidence?