PCTY · Paylocity Holding Corporation

Paylocity delivered solid Q3 FY2026 results with recurring and other revenue growing 11.6% year-over-year to $469.9 million, driven by continued demand for its cloud-based HR, Finance, and IT solutions enhanced by AI capabilities. Total revenue reached $502.3 million, up 10.5%, reflecting sustained client retention and expansion. Profitability strengthened significantly, with GAAP operating income rising to $157.0 million from $127.0 million and non-GAAP operating income to $196.8 million from $172.7 million year-over-year. GAAP net income increased to $111.3 million or $2.05 per diluted share from $91.5 million or $1.61, supported by a reduced share count of 54.3 million diluted shares versus 56.8 million last year due to repurchases. Adjusted EBITDA expanded to $220.2 million, underscoring operational efficiency. CEO Toby Williams highlighted multi-year R&D investments driving innovation across HCM, Finance, and IT offerings, underpinned by AI and core employee data. The April 2026 acquisition of Grayscale Labs bolsters AI-powered recruiting, enabling faster scaled hiring without quality compromise. Capital return remains robust, with $350 million or 2.3 million shares repurchased through Q3 and a $1.0 billion authorization increase bringing total capacity to $1.35 billion. Balance sheet shows $299.7 million in cash and reduced long-term debt to $81.3 million after repayments tied to the prior Airbase acquisition. Cash generation improved markedly, with TTM operating cash flow at $507.9 million (29.4% of revenue) versus 26.5% prior. Guidance signals continued momentum: Q4 recurring revenue growth of 9-10%, full-year 11-12%; total revenue FY2026 up ~10% to $1.755-1.760 billion. This positions Paylocity for sustained growth amid economic uncertainties, leveraging AI differentiation and strong free cash flow conversion.