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what it is
Paylocity sells cloud software that helps midsize employers run payroll, track time, manage benefits, and manage hiring.
how it gets paid
Last year Paylocity made $1.5B in revenue. Payroll was the main engine at $0.53B, or 35% of sales.
why it's growing
Revenue grew 14.8% last year. As a provider of cloud-based payroll and human capital solutions to medium-sized companies.
what just happened
Revenue reached $766M in the latest quarter, and the market cared because the company still grew despite a slower hiring backdrop.
At a glance
A balance sheet — strong enough to weather a downturn
80/100 earnings predictability — you can trust these numbers
36.9x trailing p/e — you're paying up for this one
24.5% return on capital — every dollar works hard here
xvary composite: 67/100 — average
What they do
Paylocity sells cloud software that helps midsize employers run payroll, track time, manage benefits, and manage hiring.
Once your payroll, time tracking, benefits, and hiring all live in one system, ripping it out gets painful. Paylocity had 41,650 clients as of 6/30/25, and those clients averaged more than 150 employees. That scale helps it spread software costs and still post a 26.0% operating margin.
How they make money
$1.5B
annual revenue · their business grew +14.8% last year
Payroll
$0.53B
+11.0%
Time & Labor
$0.33B
+15.0%
HR & Benefits
$0.29B
+14.0%
Talent Management
$0.20B
+13.0%
Other HCM Tools
$0.15B
+18.0%
The products that matter
payroll and HCM software
Payroll & HCM Platform
$766M revenue · entire business
it's the whole company: $766M in revenue, 14.0% net margin, and service to employers with 20 to 1,000 employees. If this platform keeps winning customers and modules, the story works. If it doesn't, there is no second engine waiting backstage.
100% of revenue
Key numbers
26.0%
operating margin
Operating margin → profit after running the business → so what: this software company keeps 26 cents of every sales dollar before taxes and interest.
24.5%
return on capital
Return on capital → profit earned on the money tied up in the business → so what: Paylocity turns investment into earnings far better than an average software firm.
$81M
long-term debt
Long-term debt → borrowed money due later → so what: $81M is just 1% of capital, which gives you balance-sheet breathing room.
13.5%
sales growth
Projected sales growth → how much revenue is expected to rise → so what: growth is still healthy, but it is well below the past 23.0% pace.
Financial health
A
strength
- balance sheet grade A — very strong financial position
- risk rank 3 — safer than 50% of stocks
- price stability 35 / 100
- long-term debt $81M (1% of capital)
- net profit margin 14.6% — keeps 15 cents of every dollar in revenue
- return on equity 24% — $0.24 profit for every $1 investors have put in
A — among the top-rated companies for balance sheet quality.
Total return vs. market
You invested $10,000 in PCTY 3 years ago → it's now worth $7,410.
The index would have given you $13,920.
source: institutional data · total return
What just happened
beat estimates
Revenue reached $766M in the latest quarter, and the market cared because the company still grew despite a slower hiring backdrop.
The cleaner read is mixed. Revenue kept rising, but management said profit was held back by higher taxes and lower other income while the labor market stayed soft.
$375M
revenue
$1.77
eps
73.4%
gross margin
the number that mattered
The number that mattered was 12% revenue growth at the start of fiscal 2026, because it showed demand held up even as hiring slowed.
-
paylocity got off to a decent start in fiscal 2026 (year ends june 30th).
-
revenues rose by 12% from a year ago, but share earnings weren't able to match last year's strong showing.both figures were above our expectations, however, and the company's operational performance actually improved.
-
profits were mostly held back by higher taxes and a decline in other income.
-
a sluggish labor market is making the operating environment more difficult.as a provider of cloud-based payroll and human capital solutions to medium-sized companies, demand for paylocity's products is heavily reliant upon businesses to hire people.
-
in the latter part of 2025, many corporations not only have been reluctant to hire, but many cut headcount.
source: company earnings report, 2026
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What could go wrong
the #1 risk is mid-market payroll competition against ADP, Paycom, and other HCM suites.
med
competitive pricing pressure
Payroll software looks sticky until a buyer runs an RFP. Paylocity serves employers with 20 to 1,000 employees — the exact part of the market that every serious HCM vendor wants. If win rates slip, growth slows before margins do.
Because this is a one-platform business, competitive pressure hits essentially 100% of the $766M revenue base.
med
compliance and payroll accuracy risk
When you process payroll, mistakes are not cosmetic. Tax rules, labor rules, and data handling obligations change constantly. One visible compliance miss can damage trust faster than a feature launch can rebuild it.
With a 14.0% net margin, even a modest rise in servicing or remediation costs can pressure profitability.
med
multiple compression
A 36.9x trailing p/e is a premium setup. Premium setups work when growth reaccelerates. They do not work when growth sits at 4.2% and investors start treating you like a slower software name.
The balance sheet can absorb volatility. The valuation might not.
The combined risk picture is simple: you have an $8B stock on $766M of revenue, with 100% of the business tied to one core platform and a premium multiple that needs better growth to hold.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
reacceleration above 4.2%
The stock is still valued like growth can speed up. If reported revenue growth stays near 4.2%, the premium multiple gets harder to defend.
risk
competitive commentary on wins and losses
Listen for management language around mid-market customer adds, pricing, and losses to ADP or Paycom. That's where the quiet part usually slips out.
calendar
next annual filing
The next 10-K should be where cleaner revenue context shows up. Right now the snapshot data mixes a $766M revenue base with a $2B estimate. You should want that reconciled.
trend
whether the chart stops arguing with the thesis
Technical score 4 and a three-year value of $7,410 from a $10,000 start tell you the market has not bought the story yet. Price needs to confirm fundamentals at some point.
Analyst rankings
short-term outlook
average
Momentum score 3. In human-speak: analysts do not see a strong short-term edge either way.
risk profile
average
Stability score 3 means this sits around the market middle — not especially safe, not obviously fragile.
chart momentum
below average
Technical score 4 points to weak relative momentum. The chart is not giving the bull case much help.
earnings predictability
80 / 100
These earnings are usually reliable. That's good for trust. It also means a sudden miss would matter more.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 235 buyers vs. 234 sellers in 3q2025. total institutional holdings: 42.0M shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$121
$228
$148
current price
$175
target midpoint · +18% from current · 3-5yr high: $320 (+115% · 21% ann'l return)
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