Paylocity Holding Corporation (PCTY) Earnings
Paylocity Holding Corporation is expected to report next earnings on November 3, 2026 (in NaN days), with a consensus EPS estimate of $1.92. PCTY has beaten EPS estimates in 12 of its last 12 reported quarters (average surprise +15.5% over the last four).
| Report date | EPS est | EPS actual | Surprise | Revenue | Rev. surprise |
|---|---|---|---|---|---|
| Aug 4, 2026 | $1.62 | $1.84 | +13.6% | $445M | +3.1% |
| May 7, 2026 | $2.43 | $2.89 | +18.9% | $502M | +2.5% |
| Feb 5, 2026 | $1.57 | $1.85 | +17.8% | $416M | -14.0% |
| Nov 4, 2025 | $1.57 | $1.75 | +11.5% | $408M | +1.9% |
| May 1, 2025 | $2.09 | $2.43 | +16.3% | $455M | +2.9% |
| Feb 6, 2025 | $1.42 | $1.52 | +7.0% | $377M | +2.8% |
| Aug 1, 2024 | $1.28 | $1.48 | +15.5% | $357M | +1.6% |
| May 2, 2024 | $1.95 | $2.21 | +13.3% | $401M | +0.5% |
| Feb 8, 2024 | $1.22 | $1.49 | +22.1% | $326M | -0.1% |
| Nov 2, 2023 | $1.10 | $1.40 | +27.4% | $318M | -0.2% |
| Aug 3, 2023 | $1.08 | $1.32 | +21.8% | $308M | +2.0% |
| May 4, 2023 | $1.51 | $1.74 | +15.3% | $340M | +2.0% |
Source: company filings + earnings calendar. For informational purposes only — not investment advice.
Earnings call summary
Q4 FY2026 · August 4, 2026
AI summary of management’s prepared remarks and analyst Q&A. For informational purposes only — not investment advice.
Management highlights
- Product Innovation and AI Strategy - Launched Paylocity Ignite AI, a suite of workflow-embedded AI agents for recruiting, talent rediscovery, and HR/payroll insights, paired with the Ignite AI Hub for organizational visibility and control over AI usage - Early client feedback is positive, with AI interactions nearly doubling quarter-over-quarter, and the platform is positioned to drive incremental AI-driven monetization - Completed two AI-focused acquisitions: Adora (AI-native automated leave of absence management) and Grayscale (AI-powered recruiting automation), both to be offered as premium monetized add-ons - Launched Paylocity Retirement, a new integrated plan administration and employee savings tool that eliminates fragmentation from disconnected third-party systems - Continued investment in R&D, with total combined (expensed + capitalized) R&D investment equal to 14.5% of fiscal 2026 revenue, a 12.6% year-over-year increase in dollar terms - Go-to-Market and Channel Performance - Benefit brokers represented over 25% of new business in fiscal 2026, with sustained channel success driven by not competing with brokers on insurance sales, strong third-party integration, and a modern platform - Achieved 7% year-over-year client base growth to 44,400 total clients, paired with over 5% ARPU growth, resulting in balanced overall growth similar to recent years - Maintained industry-leading revenue retention above 92% for fiscal 2026 - Financial Operational Highlights - Q4 fiscal 2026: Recurring revenue of $415.6 million (+12.4% YoY), total revenue up 11% YoY, adjusted EBITDA of $145.5 million (32.7% margin), $11.3 million above the top end of prior revenue guidance - Full fiscal 2026: Total revenue of ~$1.8 billion (+11% YoY), recurring revenue growth of 12.2% YoY, adjusted EBITDA of $654.9 million (37% margin, +12.3% dollar growth YoY), 24.2% free cash flow margin with 24.8% dollar growth YoY - Repurchased 2.8 million shares for $398.1 million in fiscal 2026, reducing diluted share count by 3.1% YoY, with ~$1.3 billion remaining in the repurchase authorization as of June 30, 2026 - Received external recognition, including being named one of America's Best Companies 2026 by Time and one of America's Best Employers for Women 2026 by Forbes
Guidance
- Fiscal 2027 Q1 Guidance: - Recurring and other revenue: $414 million to $419 million, representing ~10% growth over Q1 fiscal 2026 - Total revenue: $439.5 million to $444.5 million, representing ~8% growth over Q1 fiscal 2026 - Adjusted EBITDA: $152 million to $156 million; adjusted EBITDA excluding interest income on client funds: $126.5 million to $130.5 million - Estimated average daily client funds balance of ~$3.0 billion, with ~$25.5 million in expected Q1 interest income - Full Fiscal 2027 Guidance: - Recurring and other revenue: $1.777 billion to $1.792 billion, representing ~8% growth over fiscal 2026 - Total revenue: $1.880 billion to $1.895 billion, representing ~7% growth over fiscal 2026 - Adjusted EBITDA: $690 million to $700 million; adjusted EBITDA excluding interest income on client funds: $587 million to $597 million, representing ~80 basis points of margin expansion at the midpoint - Estimated average annual client funds balance of $3.4 billion to $3.5 billion, with ~$103 million in expected full-year interest income; guidance assumes two 25 basis point interest rate cuts in the back half of fiscal 27 (January and March) - Guidance assumes flat workforce levels in fiscal 27 compared to fiscal 26, a conservative assumption relative to recent year-over-year workforce growth - Accounting Change Impact: - Starting in fiscal 2027, deferred contract costs will be amortized over an 8-year useful life (up from 7 years previously). This change adds 120 to 140 basis points to fiscal 2027 adjusted EBITDA margins, with the benefit rateable over the full year and expected to persist beyond 2027 - Multi-year Guidance: - Management reaffirms long-term confidence in continued multi-year margin expansion, hitting a target of 80%+ gross margins as revenue scales to $3 billion, and continued expansion of free cash flow margins
Segment performance
Paylocity reports all results as a unified cloud-based HCM and workforce management platform, with segmented breakdown of core and new offerings: Core HCM, payroll and existing add-on solutions: Generated the vast majority of fiscal 2026 total revenue of $1.8 billion, drove 12.2% recurring revenue growth for the full fiscal year, and accounted for the majority of the 5% year-over-year increase in average revenue per client (ARPU) to $37,200. New product and acquired segments: New offerings including Paylocity Ignite AI, Paylocity Retirement, Elevate Solutions, and acquired capabilities from Grayscale and Adora contribute incremental revenue, with planned monetization as premium add-on modules. These new offerings are expected to drive future ARPU growth as adoption scales, and currently contribute a small single-digit percentage of total revenue.
Risks & headwinds
- Forward-looking statements are subject to general market and macroeconomic risks that could cause actual results to differ materially from projected guidance, including changes to interest rate movements that impact interest income from client funds - New product and AI offerings require upfront investment, and newly acquired subscale capabilities create a slight margin headwind in fiscal 2027 as they scale - Fiscal 2027 free cash flow margins face a year-over-year headwind due to a one-time tax benefit received in fiscal 2026 - Uncertainty in global macro conditions and geopolitical dynamics could impact client demand and retention, though management has not observed material impacts to date
Analyst Q&A
Q: What has been driving accelerating subscription revenue growth, and what is the expected balance between unit (client) growth and ARPU growth in fiscal 2027, plus how is AI improving sales force efficiency? /
A: Management attributes accelerating growth to balanced strong execution across all business areas: solid go-to-market performance, high client retention, and momentum from a full slate of recent product launches including Elevate, Retirement, Grayscale, Adora and Ignite AI, in a stable demand environment. For 2027, management expects the same balanced growth between client count and ARPU that the business delivered in 2026, with consistent ongoing go-to-market investment focused on productivity, similar to recent years.
Q: Are prospects increasingly requesting AI capabilities, how has this impacted win rates, and what is your capital allocation priority between M&A, organic investment and share repurchases? /
A: Management confirms AI capabilities are now a regular part of buying conversations, with embedded agentic AI driving efficiency and reducing errors for core workflows, and AI-native acquisitions opening new product monetization opportunities that are improving competitive positioning and win rates. For capital allocation, the company's strong cash flow allows it to do both: continue opportunistic share repurchases (with $1.3 billion remaining in authorization) and invest in organic growth and strategic tuck-in acquisitions like Grayscale and Adora, consistent with what the company did in fiscal 2026.
Q: Is the original 10-20% 3-5 year penetration target for the acquired Airbase finance/IT offering still on track after one year, and what will CapEx levels look like in fiscal 2027? /
A: Management confirms the original Airbase penetration target remains reasonable, and the company is pleased with the integration and adoption progress made in the first year post-acquisition. For CapEx, the higher Q4 fiscal 2026 PP&E spend was due to opportunistically pulling forward 2027 planned spend, so 2027 CapEx is expected to fall to 1-1.5% of revenue from ~2% in 2026. Management reaffirms the multi-year target of expanding free cash flow margins, with 2027 facing only a temporary one-time headwind from the 2026 tax benefit.
Q: How will the recently launched AI capabilities be monetized, and what is the order of monetization opportunity for new add-on products in fiscal 2027? /
A: Management will keep monetization options flexible, focused on capturing value proportional to the productivity gains delivered to clients. Acquired AI-native products like Grayscale and Adora will be explicitly monetized as premium add-ons, while embedded Ignite AI agents will first drive differentiation and win rates, with additional monetization pursued if sufficient incremental value is delivered. For 2027, the monetization opportunity ranking follows launch timing: already-launched Elevate Solutions and Paylocity Retirement have the closest near-term opportunity, followed by the upcoming Grayscale integration, then Adora integration, with Ignite AI also launching to clients in the near term.