Summary
Paylocity ended fiscal 2022 with a fourth quarter that showed broad growth across revenue and profit lines. Total revenue was $228.95 million, up 36.7% from the prior-year quarter. For the full fiscal year, total revenue was $852.65 million, up 34.1% from fiscal 2021. Gross profit in the quarter was $151.55 million, up 39.8%, and gross margin was 66.2%, up 1.5 percentage points. Operating income was $18.83 million, up 106.9%, and operating margin was 8.2%, up 2.8 percentage points. Net income was $15.15 million, up 27.5%. For fiscal 2022, net income was $90.78 million, up 28.2%, and diluted EPS was $1.61, up 27.8%.
Cash generation improved alongside earnings. Operating cash flow was $49.66 million in the quarter, up 27.0%, and $155.05 million for fiscal 2022, up 24.2%. Capital expenditures were $2.71 million in the quarter, up 107.8%. Free cash flow, a non-GAAP measure, was $102.5 million for fiscal 2022, or 12% of total revenue. Adjusted EBITDA, a non-GAAP measure, was $59.3 million in the quarter and $237.8 million for fiscal 2022. Deferred revenue was $12.23 million at June 30, 2022, up 40.1%, and remaining performance obligations were $51.82 million, up 8.3%.
The expense base expanded as Paylocity invested in growth. Management attributed higher costs to additional employee-related expenses, stock-based compensation, travel and entertainment, and marketing lead generation. Sales and marketing, research and development, and general and administrative expenses all rose in absolute dollars, while gross and operating margins still improved. The company ended fiscal 2022 with a client base of approximately 33,300, up 16% excluding acquisitions from approximately 28,750 a year earlier. Annual revenue retention was in excess of 92% for each of the past three fiscal years. Product engagement also grew: Community monthly users rose by more than 40% and video creation increased by over 80% in fiscal 2022.
Guidance calls for continued revenue growth. For the first quarter of fiscal 2023, total revenue is expected to be in the range of $237.3 million to $241.3 million, approximately 32% growth over fiscal 2022 first quarter total revenue. Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $55.0 million to $58.0 million. For the full fiscal year 2023, total revenue is expected to be in the range of $1.087 billion to $1.092 billion, approximately 28% growth over fiscal 2022 total revenue. Adjusted EBITDA is expected to be in the range of $314.5 million to $318.5 million. The company said it cannot reconcile forward-looking non-GAAP Adjusted EBITDA to the directly comparable GAAP measure without unreasonable effort.
Risks remain. Paylocity said COVID-19 continues to affect the global economy and the duration and severity of the pandemic remain uncertain, so future results could be unfavorably impacted. The company also cited general economic conditions, inflation risk, changes in interest rates, fluctuations in client employee counts, potential increases in client losses, and cybersecurity threats and evolving regulations. Integration risk around the Blue Marble and Cloudsnap acquisitions is another factor. Contractual commitments include $90.9 million in operating lease obligations, with $10.8 million due in the next twelve months, and $38.3 million in purchase obligations, with $21.7 million due in the next twelve months.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $228.9M | $246.0M | -6.9% | $167.5M | +36.7% |
| Gross profit | $151.6M | $170.4M | -11.1% | $108.4M | +39.8% |
| Gross margin | 66.2% | 69.3% | -3.1 pp | 64.7% | +1.5 pp |
| Research & development | $28.9M | $25.7M | +12.5% | $20.3M | +42.5% |
| Sales & marketing | $59.6M | $52.8M | +13.0% | $46.3M | +28.7% |
| General & administrative | $44.2M | $44.6M | -0.9% | $32.7M | +35.2% |
| Total operating expenses | $132.7M | $123.1M | +7.9% | $99.3M | +33.7% |
| Operating income (loss) | $18.8M | $47.4M | -60.3% | $9.1M | +106.9% |
| Operating margin | 8.2% | 19.3% | -11.0 pp | 5.4% | +2.8 pp |
| Net income (loss) | $15.1M | $34.8M | -56.5% | $11.9M | +27.5% |
| Net margin | 6.6% | 14.2% | -7.5 pp | 7.1% | -0.5 pp |
| Diluted EPS | $0.27 | $0.62 | -$0.35 | $0.21 | +$0.06 |
Risks
Risk factors warn that adoption or reinterpretation of state and federal money transmitter or money services business statutes could require registration or licensing, limit business activities, or lead regulators to determine Paylocity operated as an unlicensed money services business, exposing it to civil and criminal fines, penalties, and reputational damage.
Paylocity stores and transmits bank account numbers, tax return information, Social Security numbers, benefit and payroll data, and HIPAA-protected health information for BeneFLEX; a breach could cause identity theft, litigation, indemnity obligations, and significant liabilities. Evolving privacy laws such as GDPR and CCPA/CPRA impose penalties, including up to 4% of worldwide revenue under GDPR for noncompliance.
Core payroll, benefit, and tax services depend on agreements with eleven major U.S. banks to execute ACH and wire transfers, and on third-party couriers such as UPS to ship printed checks. If a material number of banks terminate or restrict processing, or if courier operations are disrupted, Paylocity could be unable to process funds and client relationships could be harmed.
MD&A states fiscal 2022 total revenues rose 34.1% to $852.7 million, but future revenue growth may be impacted by fluctuations in client employee counts, potential increases in client losses, a changing interest rate environment, and inflation risk. The risk factors also cite macroeconomic factors including changes in interest rates and inflationary pressures.
Paylocity typically pays client employees and taxing authorities before client electronic funds transfers finally settle; if client payments are rejected or fail to clear, it may need additional short-term liquidity and its operating results, liquidity, and banking relationships could be adversely affected.
Paylocity acquired Cloudsnap, Inc. in fiscal 2022 and borrowed $50.0 million under its revolving credit facility in Q3 fiscal 2022 to fund the acquisition, repaying it within the same quarter; cash paid for acquisitions of businesses increased to $107.6 million in fiscal 2022 from $15.0 million in fiscal 2021. Integration or impairment of acquired goodwill could disrupt operations or adversely affect results.
Risk factors state rapid revenue and client base growth requires significant capital expenditures and operating expenses and the ability to attract, train, and retain qualified sales, implementation, client service, software development, IT, and management personnel. MD&A says Paylocity expects to increase personnel and make significant investments, many in advance of direct benefit, making it difficult to determine if resources are allocated effectively.
Paylocity's Data Insights products use artificial intelligence and machine learning; future regulatory requirements or ethical considerations could restrict or impose burdensome and costly requirements on leveraging data in innovative ways.
SaaS KPIs
All quarters →Adjusted EBITDA
Non-GAAP Operating Income
Adjusted Gross Profit
Average Client Size
Total Revenue
Recurring Other Revenue
Summary, forecast, risks and KPIs are extracted from Paylocity Holding Corp's SEC filings for Q4 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.