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Paylocity Holding (PCTY) Q1 Earnings call transcript Oct 30, 2025

Daily EarningsThursday, Oct 31, 2024 3:59 pm ET

1min read

HCM -- PCTY --

In Paylocity's recent earnings call, the company showcased a strong start to its fiscal '25, driven by a 14.2% growth in recurring and other revenue. This growth is attributed to the company's ongoing commitment to innovation and the successful acquisition of Airbase, a finance and spend management software solution. The integration of Airbase into Paylocity's existing HCM platform is expected to enhance the company's offering, allowing clients to manage all payroll and non-payroll spend through a single platform.

Innovation and Market Leadership

Paylocity's leadership in the HCM industry is evident in its recognition as an overall leader in 10 HCM product categories in G2's fall 2024 grid reports. This achievement marks the company's 24th consecutive quarter of leading the HCM pack. The company's focus on innovation, including the launch of the Paylocity AI assistant, a conversational AI-driven chatbot, is aimed at streamlining HR processes and enhancing the employee experience. This innovative approach positions Paylocity well in the competitive landscape.

Strong Demand and Sales Momentum

The demand for Paylocity's modern employee-focused solutions is strong, with the company reporting a robust start to the selling season. The sales team's performance, combined with the consistency of the referral channel, has contributed to more than 25% of new business in Q1 being referral-driven. This strong sales momentum, coupled with the integration of Airbase, positions Paylocity for continued growth.

Financial Highlights

Paylocity's financial performance in Q1 was marked by a 14.3% increase in total revenue, driven by a 14.2% growth in recurring and other revenue. The company's adjusted gross profit increased to 74%, demonstrating a focus on scaling operational costs while maintaining industry-leading service levels. The company's adjusted EBITDA for Q1 was $129 million, representing a 35.5% margin, and exceeding the top end of guidance by $8.5 million.

Looking Ahead

Paylocity's outlook for fiscal '25 is optimistic, with updated guidance reflecting the strong results in Q1 and the momentum in the sales organization. The integration of Airbase is expected to represent approximately 1% of total revenue in fiscal '25. The company's adjusted EBITDA guidance for the second quarter and full fiscal year '25 reflects this optimism, with expected revenue growth and increased profitability.

Conclusion

Paylocity's earnings call highlights a company in a strong position, driven by its focus on innovation, market leadership, and financial performance. The successful integration of Airbase and the company's commitment to driving value for its clients position it well for continued growth in the competitive HCM market. With a robust sales pipeline, a strong culture, and a focus on delivering modern employee-focused solutions, Paylocity is well-positioned for the future.

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