Paylocity Holding Corporation Q4 FY2025 earnings call

• Differentiated value proposition resonated, driving 14% recurring revenue growth in Q4 and 15% for fiscal '25, with total revenue up 12% in Q4 and 14% for fiscal '25 to $1.6 billion.
• Sustained R&D investment led to product differentiation and expansion, including launch of Paylocity for Finance, expanding into the office of the CFO.
• Sales force expanded by 8% to 952 sales reps for fiscal '26, with focus on productivity and efficiency. Broker channel remained strong, representing over 25% of new business in fiscal '25.
• Revenue retention remained consistent at >92% in fiscal '25. Paylocity for Finance offers AI-powered automated solutions integrating HR and finance workflows, providing enhanced visibility and efficiency.

Recurring revenue for the fourth quarter was $369.9 million, an increase of 14%, with total revenue up 12% from the same period last year. For fiscal '25, recurring revenue growth was 15% and total revenue grew 14% as revenue ended at $1.6 billion. Average revenue per client (ARPU) reached just over $35,300 in fiscal '25 compared to $32,800 in fiscal '24, an increase of approximately 8%.

• Q1 fiscal '26: Recurring and other revenue expected $370M-$375M (12% growth over Q1 fiscal '25), total revenue $397.5M-$402.5M (10% growth over Q1 fiscal '25); adjusted EBITDA $131M-$135M.
• Fiscal '26: Recurring and other revenue expected $1.597B-$1.612B (9% growth over fiscal '25), total revenue $1.707B-$1.722B (8% growth over fiscal '25); adjusted EBITDA $608.5M-$618.5M. Guidance assumes 4 25 basis point rate cuts in fiscal '26.
• Repurchased ~315,000 shares in Q4, with $500M share repurchase authorization increase and ~$200M remaining under existing program.

• Forward-looking statements subject to numerous factors, risks, and uncertainties that could cause actual results to differ from projections. Risks include market conditions, integration of acquisitions, and impact of interest rate changes.

Q: How to view the demand environment and its impact on guidance?

A: Toby J. Williams stated demand environment was stable in '25, with stable unit growth and ARPU growth, and execution from go-to-market and sales team contributed to overage.

Q: About sales and marketing expense jump quarter-over-quarter?

A: Ryan Glenn said it was due to Q4 year-end timing of bonus payments and hiring.

Q: Status of Airbase integration and sales rep focus on Paylocity for Finance?

A: Steven R. Beauchamp said first phase of Airbase integration complete, sales team is getting up to speed on the integrated product offering, including back-to-base opportunities.

Q: AI innovations and client adoption?

A: Steven R. Beauchamp mentioned AI is increasingly in conversations, current customers using embedded AI, and growing data set and capabilities in chat interactions.

Q: Thinking on M&A after Airbase integration?

A: Toby J. Williams said open to M&A to accelerate road map where acquired product can be tightly integrated into platform, focusing on products driving client value.