Paylocity’s fourth quarter reflected stable demand and solid execution, yet the market responded negatively. Management highlighted that growth was driven by continued product adoption, particularly in areas like AI-powered HR tools and new modules for rewards and recognition. CEO Toby Williams emphasized strong sales performance and consistent client retention, noting, “Our results continue to be driven by the combination of strong sales, operational execution, and product differentiation.” The company also reported growing momentum within its broker channel, which contributed over a quarter of new business.
Is now the time to buy PCTY? Find out in our full research report (it’s free for active Edge members).
Paylocity (PCTY) Q4 CY2025 Highlights:
- Revenue: $416.1 million vs analyst estimates of $408.6 million (10.4% year-on-year growth, 1.9% beat)
- Adjusted EPS: $1.85 vs analyst estimates of $1.60 (15.9% beat)
- Adjusted Operating Income: $119.1 million vs analyst estimates of $109.3 million (28.6% margin, 8.9% beat)
- The company slightly lifted its revenue guidance for the full year to $1.74 billion at the midpoint from $1.72 billion
- EBITDA guidance for the full year is $626.5 million at the midpoint, above analyst estimates of $620.8 million
- Operating Margin: 16.9%, up from 12.4% in the same quarter last year
- Annual Recurring Revenue: $387 million (11.3% year-on-year growth)
- Market Capitalization: $5.80 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Paylocity’s Q4 Earnings Call
- Daniel Jester (BMO Capital Markets) asked how the selling environment compared to prior years; CEO Toby Williams described consistent, stable demand and strong sales team performance, especially through selling season.
- Brad Reback (Stifel) inquired about translating AI-driven client time savings into revenue; Executive Chairman Steven Beauchamp explained that greater platform engagement and API usage drive upsell potential and module adoption, but noted it’s early for concrete metrics.
- Terry Tillman (Truist Securities) requested updates on the Airbase acquisition and IT product penetration; Williams reported positive momentum and early signs of differentiation, with product integration progressing as planned.
- Sitikantha Panigrahi (Mizuho) questioned employment levels and their impact on guidance; CFO Ryan Glenn noted stable workforce trends and assumed flat employment in future expectations.
- Jacob Smith (Guggenheim Securities) asked about retention rates as cross-selling increases; Williams stated retention has remained above 92% for a decade, with broader adoption of modules supporting high retention.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) further adoption and upsell of finance and IT modules among existing clients, (2) scaling and monetization of new AI features within the suite, and (3) continued strength in the broker referral channel for new business generation. Execution on cross-selling, integration of automation, and maintaining high retention rates will be key markers of Paylocity’s strategic progress.
Paylocity currently trades at $106.25, down from $127.05 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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