Paylocity Posts Record Profits Amid Slower Growth Outlook for Fiscal 2027
Paylocity Holding Corporation (NASDAQ:PCTY) reported strong fiscal 2026 results, with revenue growing by 11%, diluted earnings per share rising 22.4% to $4.92, and significant stock buybacks totaling nearly $700 million since May 2024. The company also improved its profitability metrics, including a rise in adjusted EBITDA margin from 36.5% to 37%, and free cash flow reaching $427.8 million or 24.2% of revenue. However, Paylocity guided for slower growth in fiscal 2027, with recurring and total revenue expected to grow at around half the pace seen in fiscal 2026—approximately 8% and 7%, respectively. The company attributed part of this slowdown to a shift from acquiring new clients (which grew by about 7%) to selling additional products to existing ones. Additionally, an accounting change will spread deferred contract costs over eight years instead of seven, which is expected to boost EBITDA margins without reflecting actual operational improvements. Despite the slower growth outlook, Paylocity continues investing in AI-powered tools and new services like Paylocity Retirement and Elevate Solutions. The stock currently trades at a forward P/E ratio of 15.80, suggesting market expectations align more with those of a mature software company than one experiencing rapid expansion.
Tickers: $PCTY