PCTY
$179.74
Paylocity Hld
($.31)
(.17%)
Earnings Details
3rd Quarter March 2021
Thursday, May 6, 2021 4:05:00 PM
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Summary

Paylocity Hld Beats

Paylocity Hld (PCTY) reported 3rd Quarter March 2021 earnings of $0.89 per share on revenue of $186.1 million. The consensus earnings estimate was $0.67 per share on revenue of $185.3 million. The Earnings Whisper number was $0.73 per share. Revenue grew 8.4% on a year-over-year basis.

The company said it expects fourth quarter revenue of $159.5 million to $163.5 million. The current consensus revenue estimate is $159.50 million for the quarter ending June 30, 2021.

Paylocity Holding Corp is a provider of cloud-based payroll and human capital management, or HCM, software solutions for medium-sized organizations.

Results
Reported Earnings
$0.89
Earnings Whisper
$0.73
Consensus Estimate
$0.67
Reported Revenue
$186.1 Mil
Revenue Estimate
$185.3 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Paylocity Announces Third Quarter Fiscal Year 2021 Financial Results

  • Q3 2021 Recurring & Other Revenue of $184.9 million, up 11% year-over-year
  • Q3 2021 Total Revenue of $186.1 million, up 8% year-over-year

SCHAUMBURG, Ill., May 06, 2021 (GLOBE NEWSWIRE) -- Paylocity Holding Corporation (Nasdaq: PCTY), a leading provider of cloud-based HR and payroll software solutions, today announced financial results for the third quarter of fiscal year 2021, which ended March 31, 2021.

“Despite the continued challenges of the COVID-19 pandemic, we had a strong third quarter, with 11% growth in recurring & other revenue. Our sales team had a strong selling season as they continue to execute well in a digital selling environment, while we also remain optimistic about the potential to return to a more normalized sales environment as state restrictions ease gradually across the U.S. From a product perspective, our sustained investment in R&D continues to help us differentiate in the marketplace, as we recently announced the release of our Modern Workforce Index or MWI, a proprietary algorithm that analyzes, scores, and tracks a company’s progress in delivering more efficient HR processes to employees. We leverage the data we have from more than 25,000 clients on our platform to deliver best practices that can improve a client’s MWI score and increase employee engagement,” said Steve Beauchamp, Chief Executive Officer of Paylocity.

Third Quarter Fiscal 2021 Financial Highlights

Revenue:

  • Total revenue was $186.1 million, an increase of 8% from the third quarter of fiscal year 2020.
  • Recurring & other revenue was $184.9 million, representing 99% of total revenue and an increase of 11% from the third quarter of fiscal year 2020.

Operating Income:

  • GAAP operating income was $39.1 million and Non-GAAP operating income was $57.0 million in the third quarter of fiscal year 2021.

Net Income:

  • GAAP net income was $36.8 million or $0.65 per share for the three months ended March 31, 2021 based on 56.4 million diluted weighted average common shares outstanding.

Adjusted EBITDA:

  • Adjusted EBITDA, a non-GAAP measure, was $66.9 million in the third quarter of fiscal year 2021.

Balance Sheet and Cash Flow:

  • Cash, cash equivalents and invested corporate cash totaled $182.3 million as of the end of the quarter.

  • Cash flow from operations for the third quarter of fiscal year 2021 was $66.1 million compared to $50.7 million for the third quarter of fiscal year 2020.

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 May 6, 2021, Paylocity is issuing guidance for the fourth quarter and full fiscal year 2021 as indicated below.

Fourth Quarter 2021:

  • Total revenue is expected to be in the range of $159.5 million to $163.5 million, which represents approximately 22% – 25% growth over fiscal 2020 fourth quarter revenue.
  • Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $31.5 million to $34.5 million.

Fiscal Year 2021:

  • Total revenue is expected to be in the range of $627.7 million to $631.7 million, which represents approximately 12% growth over fiscal year 2020 revenue.
  • Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $164.3 million to $167.3 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 third quarter fiscal year 2021 results at 4:30 p.m. Central Time today (5:30 Eastern Time). A live audio webcast of the conference call, together with detailed financial information, can be accessed through the company's Investor Relations Web site at www.paylocity.com. Participants who choose to call in to the conference call can do so by dialing (855) 226-3021 or (315) 625-6892, passcode 7724575. A replay of the call will be available and archived via webcast at www.paylocity.com.

About Paylocity

Paylocity is a leading provider of cloud-based HR 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 in this release, including Adjusted EBITDA, adjusted gross profit, non-GAAP operating income, non-GAAP net income, non-GAAP net income per share, non-GAAP sales and marketing, non-GAAP total research and development and non-GAAP general and administrative and free cash flow. 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. 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. 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. 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 acquired intangibles and other items as described later in this release. 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, the valuation allowance release, excess tax benefit related to employee stock-based compensation payments and the impact of tax reform. Non-GAAP total research and development is adjusted for capitalized internal-use software costs and to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and acquisition-related costs. 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. 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 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 ongoing impact of the novel coronavirus disease (“COVID-19”) on the U.S. economy, including reductions in interest rates, business disruptions, reductions in employment and an increase in business failures that have occurred or may occur in the future; the continuing impact of COVID-19 on Paylocity’s employees and clients and Paylocity’s ability to provide services to its clients and respond to their needs; Paylocity’s ability to retain existing clients and to attract new clients to enter into subscriptions for its services; Paylocity’s ability to sell new products and retain subscriptions for its existing products to its new and existing clients; 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; Paylocity’s reliance on and ability to expand its referral network of third parties; difficulties associated with accurately forecasting revenue and appropriately planning expenses; challenges with managing growth effectively; difficulties in forecasting Paylocity’s tax position; risks related to regulatory, legislative and judicial uncertainty in Paylocity’s markets, including the potential repeal or replacement of the Affordable Care Act; continued acceptance of SaaS as an effective method for delivery of payroll and HCM solutions; Paylocity’s ability to protect and defend its intellectual property; the risk that Paylocity’s security measures are compromised or the 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; 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 7, 2020. 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, including events relating to the COVID-19 pandemic and its severity, duration and ultimate impact, 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 March 31 
     2020    2021 
Assets       
Current assets:       
Cash and cash equivalents $250,851 $175,453 
Corporate investments  34,556  6,823 
Accounts receivable, net  4,923  9,211 
Deferred contract costs  32,332  40,721 
Prepaid expenses and other  13,188  14,198 
Total current assets before funds held for clients  335,850  246,406 
Funds held for clients  1,327,304  2,051,914 
Total current assets  1,663,154  2,298,320 
Capitalized internal-use software, net  36,501  42,704 
Property and equipment, net  66,737  62,187 
Operating lease right-of-use assets  48,658  45,112 
Intangible assets, net  13,360  14,055 
Goodwill  21,655  33,184 
Long-term deferred contract costs  125,711  156,943 
Long-term prepaid expenses and other  4,917  3,773 
Deferred income tax assets  4,955  7,274 
Total assets $1,985,648 $2,663,552 
        
Liabilities and Stockholders’ Equity       
Current liabilities:       
Accounts payable $1,755 $3,319 
Accrued expenses  79,881  83,139 
Total current liabilities before client fund obligations  81,636  86,458 
Client fund obligations  1,327,304  2,051,914 
Total current liabilities  1,408,940  2,138,372 
Long-term debt  100,000   
Long-term operating lease liabilities  73,299  68,661 
Other long-term liabilities  1,747  1,910 
Deferred income tax liabilities  8,754   
Total liabilities $1,592,740 $2,208,943 
Stockholders’ equity:       
Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2020 and March 31, 2021 $ $ 
Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2020 and March 31, 2021; 53,792 shares issued and outstanding at June 30, 2020 and 54,451 shares issued and outstanding at March 31, 2021  54  54 
Additional paid-in capital  227,907  231,208 
Retained earnings  164,272  223,208 
Accumulated other comprehensive income  675  139 
Total stockholders' equity $392,908 $454,609 
Total liabilities and stockholders’ equity $1,985,648 $2,663,552 

PAYLOCITY HOLDING CORPORATION
Unaudited Consolidated Statements of Operations and Comprehensive Income
(in thousands, except per share data)

              
  Three Months Ended  Nine Months Ended  
  March 31 March 31 
     2020     2021     2020     2021  
Revenues:             
Recurring and other revenue $167,095  $184,927  $416,948  $465,195  
Interest income on funds held for clients  4,551   1,126   13,792   2,981  
Total revenues  171,646   186,053   430,740   468,176  
Cost of revenues  48,081   57,326   136,135   160,248  
Gross profit  123,565   128,727   294,605   307,928  
Operating expenses:             
Sales and marketing  37,801   40,055   112,051   115,504  
Research and development  15,612   18,458   45,416   56,443  
General and administrative  22,411   31,071   77,283   87,038  
Total operating expenses  75,824   89,584   234,750   258,985  
Operating income  47,741   39,143   59,855   48,943  
Other income (expense)  435   (207)  1,194   (843) 
Income before income taxes  48,176   38,936   61,049   48,100  
Income tax expense (benefit)  8,044   2,102   1,544   (10,836) 
Net income $40,132  $36,834  $59,505  $58,936  
Other comprehensive loss, net of tax  (182)  (126)  (214)  (536) 
Comprehensive income $39,950  $36,708  $59,291  $58,400  
              
Net income per share:             
Basic $0.75  $0.68  $1.11  $1.09  
Diluted $0.72  $0.65  $1.07  $1.05  
              
Weighted-average shares used in computing net income per share:             
Basic  53,629   54,415   53,486   54,244  
Diluted  55,953   56,414   55,760   56,338  

Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises for each of the three and nine months ended March 31 are included in the above line items:

  Three Months Ended March 31 Nine Months Ended March 31
  2020    2021    2020    2021
Cost of revenues $1,415 $1,996 $4,612 $6,401
Sales and marketing  3,542  4,001  11,279  12,368
Research and development  1,973  2,661  5,556  8,277
General and administrative  3,083  7,852  15,424  23,287
Total stock-based compensation expense $10,013 $16,510 $36,871 $50,333

PAYLOCITY HOLDING CORPORATION
Unaudited Consolidated Statements of Cash Flows
(in thousands)

        
  Nine Months Ended  
  March 31 
  2020  2021  
Cash flows from operating activities:       
Net income $59,505  $58,936  
Adjustments to reconcile net income to net cash provided by operating activities:       
Stock-based compensation expense  34,348   46,947  
Depreciation and amortization expense  27,832   32,070  
Deferred income tax expense (benefit)  1,544   (10,656) 
Provision for credit losses  232   213  
Net accretion of discounts and amortization of premiums on available-for-sale securities  (1,673)  315  
Amortization of debt issuance costs  113   127  
Other  331   545  
Changes in operating assets and liabilities:       
Accounts receivable  (1,635)  (4,495) 
Deferred contract costs  (37,829)  (39,621) 
Prepaid expenses and other  68   (2,531) 
Accounts payable  863   1,592  
Accrued expenses and other  3,096   2,318  
Net cash provided by operating activities  86,795   85,760  
Cash flows from investing activities:       
Purchases of available-for-sale securities and other  (400,343)    
Proceeds from sales and maturities of available-for-sale securities  250,791   82,488  
Capitalized internal-use software costs  (19,213)  (21,664) 
Purchases of property and equipment  (14,578)  (8,155) 
Acquisition of business, net of cash acquired     (14,992) 
Net cash provided by (used in) investing activities  (183,343)  37,677  
Cash flows from financing activities:       
Net change in client fund obligations  334,707   724,610  
Repayment of credit facility     (100,000) 
Proceeds from exercise of stock options     146  
Proceeds from employee stock purchase plan  3,961   6,100  
Taxes paid related to net share settlement of equity awards  (33,136)  (51,828) 
Payment of debt issuance costs  (675)  (56) 
Net cash provided by financing activities  304,857   578,972  
Net change in cash, cash equivalents and funds held for clients' cash and cash equivalents  208,309   702,409  
Cash, cash equivalents and funds held for clients' cash and cash equivalents—beginning of period  1,426,143   1,492,133  
Cash, cash equivalents and funds held for clients' cash and cash equivalents—end of period $1,634,452  $2,194,542  
Supplemental Disclosure of Non-Cash Investing and Financing Activities       
Liabilities assumed for acquisition $  $281  
Supplemental Disclosure of Cash Flow Information       
Cash paid for interest $115  $820  
Cash paid (refunds received) for income taxes $24  $(222) 
Reconciliation of cash, cash equivalents and funds held for clients' cash and cash equivalents to the Unaudited Consolidated Balance Sheets       
Cash and cash equivalents $114,325  $175,453  
Funds held for clients' cash and cash equivalents  1,520,127   2,019,089  
Total cash, cash equivalents and funds held for clients' cash and cash equivalents $1,634,452  $2,194,542  



Paylocity Holding Corporation 
Reconciliation of GAAP to non-GAAP Financial Measures 
(In thousands except per share data) 
              
           
   Three Months  Nine Months 
   Ended  Ended 
   March 31,  March 31, 
   2020   2021   2020   2021  
Reconciliation from Gross profit to Adjusted gross profit:             
Gross profit $123,565  $128,727  $294,605  $307,928  
Amortization of capitalized internal-use software costs  4,926   6,005   14,073   17,273  
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  1,415   1,996   4,612   6,401  
Adjusted gross profit $129,906  $136,728  $313,290  $331,602  
              
   Three Months  Nine Months 
   Ended  Ended 
   March 31,  March 31, 
   2020   2021   2020   2021  
Reconciliation from Operating income to Non-GAAP operating income:             
Operating income $47,741  $39,143  $59,855  $48,943  
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  10,013   16,510   36,871   50,333  
Amortization of acquired intangibles  563   1,028   1,688   2,812  
Other items (1)  385   292   2,947   1,377  
Non-GAAP operating income $58,702  $56,973  $101,361  $103,465  
              
   Three Months  Nine Months 
   Ended  Ended 
   March 31,  March 31, 
   2020   2021   2020   2021  
Reconciliation from Net income to Non-GAAP net income:             
Net income $40,132  $36,834  $59,505  $58,936  
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  10,013   16,510   36,871   50,333  
Amortization of acquired intangibles  563   1,028   1,688   2,812  
Other items (1)  385   292   2,947   1,377  
Income tax effect on adjustments (2)  (4,615)  (5,215)  (14,166)  (20,602) 
Non-GAAP net income $46,478  $49,449  $86,845  $92,856  
              
   Three Months  Nine Months 
   Ended  Ended 
   March 31,  March 31, 
   2020   2021   2020   2021  
Calculation of Non-GAAP net income per share:             
Non-GAAP net income $46,478  $49,449  $86,845  $92,856  
Diluted weighted-average number of common shares  55,953   56,414   55,760   56,338  
Non-GAAP net income per share $0.83  $0.88  $1.56  $1.65  
              
   Three Months  Nine Months 
   Ended  Ended 
   March 31,  March 31, 
   2020   2021   2020   2021  
Reconciliation from Net income to Adjusted EBITDA:             
Net income $40,132  $36,834  $59,505  $58,936  
Interest expense  102   204   290   895  
Income tax expense (benefit)  8,044   2,102   1,544   (10,836) 
Depreciation and amortization expense  9,571   10,999   27,832   32,070  
EBITDA  57,849   50,139   89,171   81,065  
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  10,013   16,510   36,871   50,333  
Other items (1)  385   292   2,947   1,377  
Adjusted EBITDA $68,247  $66,941  $128,989  $132,775  
              
   Three Months  Nine Months 
   Ended  Ended 
   March 31,  March 31, 
   2020   2021   2020   2021  
Reconciliation of Non-GAAP sales and marketing:             
Sales and marketing $37,801  $40,055  $112,051  $115,504  
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  3,542   4,001   11,279   12,368  
Non-GAAP sales and marketing $34,259  $36,054  $100,772  $103,136  
              
   Three Months  Nine Months 
   Ended  Ended 
   March 31,  March 31, 
   2020   2021   2020   2021  
Reconciliation of Non-GAAP total research and development:             
Research and development $15,612  $18,458  $45,416  $56,443  
Capitalized internal-use software costs  7,074   6,832   19,213   21,664  
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  1,973   2,661   5,556   8,277  
Other items (3)     215      600  
Non-GAAP total research and development $20,713  $22,414  $59,073  $69,230  
              
   Three Months  Nine Months 
   Ended  Ended 
   March 31,  March 31, 
   2020   2021   2020   2021  
Reconciliation of Non-GAAP general and administrative:             
General and administrative $22,411  $31,071  $77,283  $87,038  
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  3,083   7,852   15,424   23,287  
Amortization of acquired intangibles  563   1,028   1,688   2,812  
Other items (1)  385   77   2,947   777  
Non-GAAP general and administrative $18,380  $22,114  $57,224  $60,162  
              
(1)  Represents nonrecurring costs including acquisition-related and lease exit costs. Also includes the settlement of a certain legal matter and related litigation costs of $2.0 million during the nine months ended March 31, 2020.         
              
(2) 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.         
              
(3)  Represents certain nonrecurring acquisition-related costs.         
              

CONTACT:
Ryan Glenn
investors@paylocity.com
www.paylocity.com


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Source: Paylocity