Summary
Paylocity closed fiscal 2025 with fourth-quarter total revenue of $400.74 million, up 12.2% from $357.29 million in the prior-year quarter. For the full fiscal year, total revenue reached $1,595.2 million, up 13.7% from $1,402.5 million. The client base, excluding acquisitions, grew 7% to about 41,650 at June 30, 2025 from about 39,050 a year earlier. Annual revenue retention stayed above 92%. Management tied the growth to sales execution, higher average revenue per client, and the launch of Paylocity for Finance, which extends the platform into the Office of the CFO. Recurring other revenue grew 14% in the quarter and 15% for the full year.
Fourth-quarter gross profit was $271.87 million, up 13.1% from $240.41 million, and gross margin rose to 67.8% from 67.3%. Operating income was $66.23 million, up 5.3% from $62.91 million, but operating margin slipped to 16.5% from 17.6%. Net income was $48.61 million, essentially flat against $48.82 million in the prior-year quarter. For the full year, operating income was $304.02 million, up 16.9%, and net income was $227.13 million, up 9.8% from $206.77 million. Diluted earnings per share for fiscal 2025 were $4.02, up 10.7% from $3.63. Non-GAAP results showed a similar pattern: fourth-quarter Adjusted EBITDA was $130.7 million versus $120.2 million a year ago, while full-year Adjusted EBITDA was $583.0 million, up 15% and equal to 36.5% of total revenue compared with 36.0%. Adjusted EBITDA excluding interest income on funds held for clients was $99.9 million in the quarter and $459.6 million for the year, up 19%, or 31.2% of recurring and other revenue versus 30.0%.
Cash generation remained solid. Full-year net cash provided by operating activities was $418.23 million, up 8.7% from $384.67 million. Fourth-quarter operating cash flow was $86.57 million, up 8.3%. Capital expenditures were $5.45 million in the quarter, down 13.9%, and $13.07 million for the year, down 27.5%. Free cash flow, a non-GAAP measure, was $342.8 million, or 21.5% of total revenue, compared with $305.9 million, or 21.8%. Deferred revenue was $28.31 million, up 13.8%, while remaining performance obligations were $146.87 million, up 90.8%. The Airbase acquisition, completed in October 2024, expanded the company's spend management capabilities. The client count grew at a compound annual growth rate of approximately 7% from June 30, 2023 to June 30, 2025.
Capital returns and guidance rounded out the release. Paylocity repurchased 800,000 shares during fiscal 2025 and increased its share repurchase authorization by $500 million; the board added another $500 million in July 2025. The fiscal 2025 repurchases were at an average cost per share of $190.16. For the first quarter of fiscal 2026, management guided recurring and other revenue growth of about 12% and total revenue growth of about 10%. Adjusted EBITDA is expected at $131.0 million to $135.0 million, and Adjusted EBITDA excluding interest income on funds held for clients at $103.5 million to $107.5 million. For full fiscal year 2026, recurring and other revenue growth is guided to about 9% and total revenue growth to about 8%. Adjusted EBITDA is guided to $608.5 million to $618.5 million, and the excluding-interest variant to $498.5 million to $508.5 million. The full-year fiscal 2026 total revenue growth guidance of about 8% compares with 13.7% growth in fiscal 2025.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $400.7M | $454.5M | -11.8% | $357.3M | +12.2% |
| Gross profit | $271.9M | $324.7M | -16.3% | $240.4M | +13.1% |
| Gross margin | 67.8% | 71.4% | -3.6 pp | 67.3% | +0.5 pp |
| Research & development | $51.0M | $51.4M | -0.7% | $44.2M | +15.5% |
| Sales & marketing | $100.9M | $91.8M | +9.9% | $88.0M | +14.6% |
| General & administrative | $53.7M | $54.5M | -1.4% | $45.3M | +18.7% |
| Total operating expenses | $205.6M | $197.7M | +4.0% | $177.5M | +15.9% |
| Operating income (loss) | $66.2M | $127.0M | -47.9% | $62.9M | +5.3% |
| Operating margin | 16.5% | 27.9% | -11.4 pp | 17.6% | -1.1 pp |
| Net income (loss) | $48.6M | $91.5M | -46.9% | $48.8M | -0.4% |
| Net margin | 12.1% | 20.1% | -8.0 pp | 13.7% | -1.5 pp |
| Diluted EPS | $0.86 | $1.61 | -$0.75 | $0.86 | ±$0.00 |
Risks
MD&A identifies uncertainties around market and economic conditions that have recently impacted and may continue to impact revenue growth through fluctuations in client employee counts, elongated sales cycles, client losses, and a changing interest rate environment. FY2025 year-to-date revenue was up 13.7% to $1.60B, while MD&A cites FY2024 total revenue growth of 19%.
Risk factors state that rapid technological advancements in AI and machine learning may allow new or existing competitors to deliver solutions at lower prices, more efficiently, or more conveniently. They also warn that non-deterministic generative AI outputs may compromise product reliability and lead to customer dissatisfaction.
The HCM and payroll market is fragmented and highly competitive, with competitors including ADP, Dayforce, Paychex, Paycom, and UKG that have greater resources and may offer price concessions or delayed payment terms. Competitive pressure could negatively impact sales, profitability, or market share.
The company has experienced cybersecurity attacks and incidents in the past, though none were deemed material, and it is incorporating AI and machine learning features that may increase vulnerability. A breach involving payroll, bank account, tax, Social Security, or HIPAA-protected health information could cause client loss, litigation, regulatory action, and liability.
MD&A says elongated sales cycles are among the economic uncertainties that may continue to impact revenue growth. Risk factors also note that during an economic slowdown clients may delay or reduce spending on payroll and HCM solutions or renegotiate contracts.
Risk factors highlight increasing and changing regulatory requirements, including potential money transmitter or money services business licensing, new AI and machine learning regulations in the U.S. and EU, and data privacy laws such as GDPR, CCPA, and HIPAA. Noncompliance could lead to fines, penalties, and restrictions on operations.
The October 2024 Airbase Inc. acquisition expanded spend management and contributed to $277.9 million of net cash used for acquisitions in FY2025 investing activities. Risk factors cite integration difficulties, client conversion challenges, key employee loss, and potential goodwill impairment if acquisitions do not yield expected returns.
The revolving credit agreement contains restrictive covenants on liens, indebtedness, mergers, and asset sales, and failure to comply could limit borrowing or accelerate amounts due. The company borrowed $325.0 million in September 2024 to fund the Airbase acquisition, had $162.5 million outstanding at June 30, 2025, and incurred $12.3 million of additional interest expense in FY2025.
The business depends on major U.S. banks for ACH and wire transfers and on third-party couriers such as UPS. If a bank fails to process transfers or terminates its relationship, client relationships and liquidity could be harmed; payroll funding risk also exists if client payments are rejected or fail to clear.
Corporate investments and client funds are subject to market, interest rate, credit, and liquidity risks, and funds held for clients exceed FDIC insurance limits. FY2025 interest income on funds held for clients increased only 2% to $123.4 million as higher average daily balances were mostly offset by lower interest rates.
Risk factors state that hiring for skilled software, sales, client service, and implementation personnel is highly competitive, and the loss of key executive officers or key employees could disrupt the business. The company relies on these personnel to support growth and product innovation.
The board authorized an additional $500 million for share repurchases in 2025, after $149.6 million of repurchases in FY2025 at an average cost of $190.16 per share. The program may increase stock price volatility, reduce cash available for working capital or acquisitions, and may not enhance long-term stockholder value.
SaaS KPIs
All quarters →Average Client Size
Summary, forecast, risks and KPIs are extracted from Paylocity Holding Corp's SEC filings for Q4 FY2025 (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.