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Paylocity Announces First Quarter Fiscal Year 2024 Financial Results
Источник: Nasdaq GlobeNewswire / 02 ноя 2023 15:05:01 America/Chicago
- Q1 2024 Recurring & Other Revenue of $291.7 million, up 19% year-over-year
- Q1 2024 Total Revenue of $317.6 million, up 25% year-over-year
SCHAUMBURG, Ill., Nov. 02, 2023 (GLOBE NEWSWIRE) -- Paylocity Holding Corporation (Nasdaq: PCTY), a leading provider of cloud-based HCM and payroll software solutions, today announced financial results for the first quarter of fiscal year 2024, which ended September 30, 2023.
“Our solid results continued into fiscal 24, with total revenue growth of 25% and recurring revenue growth of 19%, as our differentiated value proposition of providing the most modern software in the industry continues to resonate in the marketplace. In October, we held our annual Elevate Client Conference, where we connected with several thousand clients and further demonstrated our ongoing commitment to driving innovation with the announcement of two new product releases: Rewards & Recognition, which is designed to help clients improve employee retention by automating and customizing both peer and manager feedback, and Employee Voice, which combines AI with our proprietary, statistically validated engagement model to improve upon our existing Survey functionality and help clients aggregate, analyze, and act on employee feedback at a much larger scale,” said Steve Beauchamp, Co-Chief Executive Officer of Paylocity.
First Quarter Fiscal 2024 Financial Highlights
Revenue:
- Total revenue was $317.6 million, an increase of 25% from the first quarter of fiscal year 2023.
- Recurring & other revenue was $291.7 million, an increase of 19% from the first quarter of fiscal year 2023.
Operating Income:
- GAAP operating income was $41.2 million and non-GAAP operating income was $86.9 million in the first quarter of fiscal year 2024.
Net Income:
- GAAP net income was $34.5 million or $0.61 per share in the first quarter of fiscal year 2024 based on 56.9 million diluted weighted average common shares outstanding.
Adjusted EBITDA:
- Adjusted EBITDA, a non-GAAP measure, was $104.9 million in the first quarter of fiscal year 2024.
Balance Sheet and Cash Flow:
- Cash and cash equivalents totaled $305.0 million as of the first quarter of fiscal year 2024.
- Cash flow from operations for the first three months of fiscal year 2024 was $62.1 million compared to $16.4 million for the first three months of fiscal year 2023.
- As of September 30, 2023, Paylocity had no long-term debt and had not drawn on its credit facility.
A reconciliation of GAAP to non-GAAP financial measures has been provided in this press release, including the accompanying tables. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”
Business Outlook
Based on information available as of November 2, 2023, Paylocity is issuing guidance for the second quarter and full fiscal year 2024 as indicated below.
Second Quarter 2024:
- Total revenue is expected to be in the range of $322.5 million to $326.5 million, which represents approximately 19% growth over fiscal year 2023 second quarter total revenue.
- Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $100.0 million to $103.0 million.
Fiscal Year 2024:
- Total revenue is expected to be in the range of $1.405 billion to $1.410 billion, which represents approximately 20% growth over fiscal year 2023 total revenue.
- Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $474.0 million to $478.0 million.
We are unable to reconcile forward-looking non-GAAP Adjusted EBITDA to its directly comparable GAAP financial measure because the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort.
Conference Call Details
Paylocity will host a conference call to discuss its first quarter fiscal year 2024 results at 4:30 p.m. Central Time today (5:30 p.m. Eastern Time). A live audio webcast of the conference call along with detailed financial information can be accessed through https://investors.paylocity.com/events-and-presentations where dial in details are provided. A replay of the call will be available and archived via webcast at https://investors.paylocity.com/.About Paylocity
Paylocity is a leading provider of cloud-based HCM and payroll software solutions headquartered in Schaumburg, IL. Founded in 1997 and publicly traded since 2014, Paylocity offers an intuitive, easy-to-use product suite that helps businesses tackle today’s challenges while moving them toward the promise of tomorrow. Known for its unique culture and consistently recognized as one of the best places to work, Paylocity accompanies its clients on the journey to create great workplaces and help people achieve their best through automation, data-driven insights, and engagement. For more information, visit www.paylocity.com.
Non-GAAP Financial Measures
The company uses certain non-GAAP financial measures when reporting its financial results, including Adjusted EBITDA, Adjusted EBITDA margin, adjusted gross profit, adjusted gross profit margin, non-GAAP operating income, non-GAAP net income, non-GAAP net income per share, non-GAAP sales and marketing and non-GAAP sales and marketing margin, non-GAAP total research and development and non-GAAP total research and development margin, non-GAAP general and administrative and non-GAAP general and administrative margin, free cash flow and free cash flow margin, certain of which are included in this release. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. We define Adjusted EBITDA as net income (loss) before interest expense, income tax expense (benefit), and depreciation and amortization expense, adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and other items as described later in this release. We calculate Adjusted EBITDA margin as adjusted EBITDA as described in the preceding sentence divided by total revenues. Adjusted gross profit is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and amortization of capitalized internal-use software costs and certain acquired intangibles. Adjusted gross profit margin is calculated as adjusted gross profit as described in the preceding sentence divided by total revenues. Non-GAAP operating income is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, the amortization of acquired intangibles and other items as described later in this release. Non-GAAP sales and marketing expense is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and other items as described later in this release. Non-GAAP sales and marketing margin is calculated by dividing non-GAAP sales and marketing by total revenues. Non-GAAP general and administrative expense is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, the amortization of certain acquired intangibles and other items as described later in this release. Non-GAAP general and administrative margin is calculated by dividing non-GAAP general and administrative margin by total revenues. Non-GAAP net income and non-GAAP net income per share are adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, the amortization of acquired intangibles and other items as described later in this release, including the income tax effect on these items. Non-GAAP total research and development is adjusted for capitalized internal-use software costs paid and to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and other items as described later in this release. Non-GAAP total research and development margin is calculated by dividing non-GAAP total research and development by total revenues. Free cash flow is defined as net cash provided by operating activities less capitalized internal-use software costs, purchase of property and equipment and lease allowances used for tenant improvements. Free cash flow margin is calculated by dividing free cash flow as defined in the preceding sentence divided by total revenues. Please note that other companies may define their non-GAAP financial measures differently than we do. Management presents certain non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance. Management uses these non-GAAP financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. Management also intends to provide these non-GAAP financial measures as part of the company’s future earnings discussions and, therefore, the inclusion of the non-GAAP financial measures should provide consistency in the company’s financial reporting. Non-GAAP financial measures have limitations as an analytical tool. Investors are encouraged to review the reconciliation of the non-GAAP measures to their most directly comparable GAAP measures provided in this release.Safe Harbor/Forward Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included herein regarding Paylocity’s future operations, ability to scale its business, future financial position and performance, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “seek” and similar expressions (or the negative of these terms) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about management's estimates regarding future revenues and financial performance, long-term financial targets and other statements about management’s beliefs, intentions or goals. Paylocity may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on Paylocity’s forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements, including, but not limited to the general economic conditions in regions in which Paylocity does business, changes in interest rates, business disruptions, reductions in employment and an increase in business failures that have occurred or may occur in the future; Paylocity’s ability to leverage AI Assist and other forms of artificial intelligence and machine learning in its technology, which may be constrained by current and future laws, regulations, interpretive positions or standards governing new and evolving technologies and ethical considerations that could restrict or impose burdensome and costly requirements on its ability to continue to leverage data in innovative ways; Paylocity’s ability to retain existing clients and to attract new clients to enter into subscriptions for its services; the challenges associated with a growing company’s ability to effectively service clients in a dynamic and competitive market; challenges associated with expanding and evolving a sales organization to effectively address new geographies and products and services; challenges related to cybersecurity threats and evolving cybersecurity regulations; Paylocity’s reliance on and ability to expand its referral network of third parties; Paylocity’s reliance on third party payroll partners in foreign jurisdictions in its Blue Marble business; difficulties associated with accurately forecasting revenue and appropriately planning expenses; challenges with managing growth effectively; risks related to regulatory, legislative and judicial uncertainty in Paylocity’s markets; Paylocity’s ability to protect and defend its intellectual property; the risk that Paylocity’s security measures are compromised or a threat actor gains unauthorized access to customer data; unexpected events in the market for Paylocity’s solutions; changes in the competitive environment in Paylocity’s industry and the markets in which it operates; adverse changes in general economic or market conditions; changes in the employment rates of Paylocity’s clients and the resultant impact on revenue; the possibility that Paylocity may be adversely affected by other economic, business, and/or competitive factors; and other risks and potential factors that could affect Paylocity’s business and financial results identified in Paylocity’s filings with the Securities and Exchange Commission (the “SEC”), including its 10-K filed with the SEC on August 4, 2023. Additional information will also be set forth in Paylocity’s future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that Paylocity makes with the SEC. These forward-looking statements represent Paylocity’s expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Paylocity disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.PAYLOCITY HOLDING CORPORATION
Unaudited Consolidated Balance Sheets
(in thousands, except per share data)June 30,
2023September 30,
2023Assets Current assets: Cash and cash equivalents $ 288,767 $ 305,031 Accounts receivable, net 25,085 30,111 Deferred contract costs 78,109 82,438 Prepaid expenses and other 35,061 36,971 Total current assets before funds held for clients 427,022 454,551 Funds held for clients 2,621,415 2,528,353 Total current assets 3,048,437 2,982,904 Capitalized internal-use software, net 86,127 95,522 Property and equipment, net 64,069 63,341 Operating lease right-of-use assets 44,067 42,890 Intangible assets, net 34,527 31,991 Goodwill 102,054 102,054 Long-term deferred contract costs 294,222 305,788 Long‑term prepaid expenses and other 6,331 5,925 Deferred income tax assets 15,846 16,362 Total assets $ 3,695,680 $ 3,646,777 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 6,153 $ 8,749 Accrued expenses 143,287 131,693 Total current liabilities before client fund obligations 149,440 140,442 Client fund obligations 2,625,355 2,531,789 Total current liabilities 2,774,795 2,672,231 Long-term operating lease liabilities 62,471 60,584 Other long-term liabilities 3,731 3,584 Deferred income tax liabilities 11,820 17,739 Total liabilities $ 2,852,817 $ 2,754,138 Stockholders’ equity: Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2023 and September 30, 2023 $ — $ — Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2023 and September 30, 2023; 55,912 shares issued and outstanding at June 30, 2023 and 56,167 shares issued and outstanding at September 30, 2023 56 56 Additional paid-in capital 380,632 395,771 Retained earnings 466,690 501,207 Accumulated other comprehensive loss (4,515 ) (4,395 ) Total stockholders' equity $ 842,863 $ 892,639 Total liabilities and stockholders’ equity $ 3,695,680 $ 3,646,777 PAYLOCITY HOLDING CORPORATION
Unaudited Consolidated Statements of Operations and Comprehensive Income
(in thousands, except per share data)Three Months Ended
September 30,2022 2023 Revenues: Recurring and other revenue $ 245,406 $ 291,685 Interest income on funds held for clients 7,874 25,901 Total revenues 253,280 317,586 Cost of revenues 84,543 101,467 Gross profit 168,737 216,119 Operating expenses: Sales and marketing 71,063 80,403 Research and development 40,093 44,605 General and administrative 50,492 49,922 Total operating expenses 161,648 174,930 Operating income 7,089 41,189 Other income (expense) (163 ) 3,225 Income before income taxes 6,926 44,414 Income tax expense (benefit) (23,426 ) 9,897 Net income $ 30,352 $ 34,517 Other comprehensive income (loss), net of tax (2,372 ) 120 Comprehensive income $ 27,980 $ 34,637 Net income per share: Basic $ 0.55 $ 0.62 Diluted $ 0.54 $ 0.61 Weighted-average shares used in computing net income per share: Basic 55,453 56,037 Diluted 56,664 56,881 Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises for each of the three months ended September 30, are included in the above line items:
Three Months Ended
September 30,2022 2023 Cost of revenues $ 5,045 $ 5,602 Sales and marketing 10,500 9,871 Research and development 10,234 10,870 General and administrative 19,199 15,633 Total stock-based compensation expense and employer payroll taxes related to stock releases and option exercises $ 44,978 $ 41,976 PAYLOCITY HOLDING CORPORATION
Unaudited Consolidated Statements of Cash Flows
(in thousands)Three Months Ended
September 30,2022 2023 Cash flows from operating activities: Net income $ 30,352 $ 34,517 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation expense 39,813 39,005 Depreciation and amortization expense 14,267 17,121 Deferred income tax expense (benefit) (23,415 ) 5,391 Provision for credit losses 266 181 Net accretion of discounts on available-for-sale securities (842 ) (1,392 ) Amortization of debt issuance costs 94 65 Other 125 124 Changes in operating assets and liabilities: Accounts receivable (6,020 ) (4,801 ) Deferred contract costs (19,328 ) (14,985 ) Prepaid expenses and other 614 (1,669 ) Accounts payable (1,805 ) 1,569 Accrued expenses and other (17,734 ) (12,984 ) Net cash provided by operating activities 16,387 62,142 Cash flows from investing activities: Purchases of available-for-sale securities (118,926 ) (92,567 ) Proceeds from sales and maturities of available-for-sale securities 42,850 101,216 Capitalized internal-use software costs (9,953 ) (14,193 ) Purchases of property and equipment (3,447 ) (3,454 ) Other investing activities — (406 ) Net cash used in investing activities (89,476 ) (9,404 ) Cash flows from financing activities: Net change in client fund obligations (1,688,339 ) (93,566 ) Taxes paid related to net share settlement of equity awards (74,071 ) (28,825 ) Payment of debt issuance costs (855 ) (11 ) Net cash used in financing activities (1,763,265 ) (122,402 ) Net change in cash, cash equivalents and funds held for clients' cash and cash equivalents (1,836,354 ) (69,664 ) Cash, cash equivalents and funds held for clients' cash and cash equivalents—beginning of period 3,793,453 2,421,312 Cash, cash equivalents and funds held for clients' cash and cash equivalents—end of period $ 1,957,099 $ 2,351,648 Supplemental Disclosure of Non-Cash Investing and Financing Activities Purchases of property and equipment and internal-use software, accrued but not paid $ — $ 1,803 Liabilities assumed for acquisitions $ 117 $ — Supplemental Disclosure of Cash Flow Information Cash paid for interest $ 62 $ 124 Cash paid for income taxes $ 19 $ 6,207 Reconciliation of cash, cash equivalents and funds held for clients' cash and cash equivalents to the Consolidated Balance Sheets Cash and cash equivalents $ 65,484 $ 305,031 Funds held for clients' cash and cash equivalents 1,891,615 2,046,617 Total cash, cash equivalents and funds held for clients' cash and cash equivalents $ 1,957,099 $ 2,351,648 Paylocity Holding Corporation
Reconciliation of GAAP to non-GAAP Financial Measures
(In thousands except per share data)Three Months Ended
September 30,2022 2023 Reconciliation from Gross profit to Adjusted gross profit: Gross profit $ 168,737 $ 216,119 Amortization of capitalized internal-use software costs 7,042 9,535 Amortization of certain acquired intangibles 1,854 1,854 Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 5,045 5,602 Other items (1) 19 — Adjusted gross profit $ 182,697 $ 233,110 Three Months Ended
September 30,2022 2023 Reconciliation from Operating income to Non-GAAP Operating income: Operating income $ 7,089 $ 41,189 Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 44,978 41,976 Amortization of acquired intangibles 2,771 2,536 Other items (2) 265 1,185 Non-GAAP Operating income $ 55,103 $ 86,886 Three Months Ended
September 30,2022 2023 Reconciliation from Net income to Non-GAAP Net income: Net income $ 30,352 $ 34,517 Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 44,978 41,976 Amortization of acquired intangibles 2,771 2,536 Other items (2) 265 1,185 Income tax effect on adjustments (3) (22,935 ) (830 ) Non-GAAP Net income $ 55,431 $ 79,384 Three Months Ended
September 30,2022 2023 Calculation of Non-GAAP Net income per share: Non-GAAP Net income $ 55,431 $ 79,384 Diluted weighted-average number of common shares 56,664 56,881 Non-GAAP Net income per share $ 0.98 $ 1.40 Three Months Ended
September 30,2022 2023 Reconciliation from Net income to Adjusted EBITDA: Net income $ 30,352 $ 34,517 Interest expense 187 190 Income tax expense (benefit) (23,426 ) 9,897 Depreciation and amortization expense 14,267 17,121 EBITDA 21,380 61,725 Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 44,978 41,976 Other items (2) 265 1,185 Adjusted EBITDA $ 66,623 $ 104,886 Three Months Ended
September 30,2022 2023 Reconciliation of Non-GAAP sales and marketing: Sales and marketing $ 71,063 $ 80,403 Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 10,500 9,871 Other items (1) 22 — Non-GAAP sales and marketing $ 60,541 $ 70,532 Three Months Ended
September 30,2022 2023 Reconciliation of Non-GAAP total research and development: Research and development $ 40,093 $ 44,605 Capitalized internal-use software costs 9,953 14,193 Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 10,234 10,870 Other items (1) 218 222 Non-GAAP total research and development $ 39,594 $ 47,706 Three Months Ended
September 30,2022 2023 Reconciliation of Non-GAAP general and administrative: General and administrative $ 50,492 $ 49,922 Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises 19,199 15,633 Amortization of certain acquired intangibles 917 682 Other items (2) 6 963 Non-GAAP general and administrative $ 30,370 $ 32,644 Three Months Ended
September 30,2022 2023 Reconciliation of Free Cash Flow: Net cash provided by operating activities $ 16,387 $ 62,142 Capitalized internal-use software costs (9,953 ) (14,193 ) Purchases of property and equipment (3,447 ) (3,454 ) Free Cash Flow $ 2,987 $ 44,495 (1) Represents acquisition-related costs. (2) Represents acquisition and other nonrecurring transaction-related costs. (3) Includes the income tax effect on non-GAAP net income adjustments related to stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, amortization of acquired intangibles and other items, which include acquisition and other nonrecurring transaction-related costs. Contact:
Ryan Glenn
investors@paylocity.com
www.paylocity.com