Paylocity Holding Corporation Q3 FY2026 earnings call

• Invested in R&D and broader automation efforts throughout the year, with bias to invest back into business elements while increasing profitability. • Excited about Grayscale acquisition, planning to integrate and launch it in ~12 months, leveraging its AI capabilities for candidate engagement. • AI strategy is to embed AI across suite in everyday processes for ROI, saving time, providing insights. • Capital allocation policy continues with stock buybacks, funding acquisitions for growth. • Managed service offerings are extension of platform for higher-level service, TAM expansion opportunity, no significant margin headwinds expected. • M&A focus on accelerating existing direction, AI critical for product tuck-ins.

No specific product segment financial performance details with absolute terms and revenue contribution % provided in the transcript.

• Fourth quarter recurring guidance 9% to 10% growth, used as data point for next fiscal year with prudence. • Capital allocation strategy to continue stock buybacks, fund acquisitions, maintain dry powder for M&A.

No discussion of risk and operational failures in the transcript.

• Q: On Grayscale targeting and how it converts to core customer demographic, A: Customers with larger hourly or salary populations in hiring mode, many fit average target market of 150 employees. • Q: How acquisition boosts AI strategy outside acquired tech, A: AI strategy to embed across suite, Grayscale is example of automating candidate interaction and providing intelligence, monetization opportunity. • Q: Recurring growth and fiscal 27 guidance, A: Fourth quarter 9%-10% recurring growth as data point, guidance philosophy with prudence, client workforce levels resilient. • Q: Capital allocation and buybacks, A: $350 million buybacks in first nine months, $650 million in two years, continue strategy with flexibility. • Q: Managed service offerings revenue opportunity and margin, A: Extension of platform for higher service, TAM expansion, no significant margin headwinds. • Q: Grayscale acquisition impact on margin and revenue, A: Immaterial on revenue and EBITDA. • Q: Macro backdrop and employment in FQ4, A: Employment stable, embedded in guidance. • Q: Winning deals and customer retention, A: Strong execution, sales and go-to-market, broker channel performance, product innovation. • Q: M&A focus and AI in deals, A: M&A to accelerate existing direction, AI critical for product tuck-ins. • Q: Elevate solutions market fit and margin impact, A: Targets core market, no margin headwinds, TAM expansion. • Q: Pricing model change and customer feedback, A: No big change in market, consistent pricing conversations. • Q: Grayscale market competitiveness and secret sauce, A: Recruiting category strength, AI investment and advanced capabilities for differentiation. • Q: 4Q recurring guidance and workforce levels, A: Assumptions of stable workforce levels. • Q: Sales enablement for expanded platform, A: Developed playbook, two-tier model for product launch. • Q: Headcount trajectory, A: Planning ongoing, focus on growth and efficiency. • Q: Adoption and cross-sell of new products, A: Pleased with traction, value prop resonating. • Q: Margin leverage and automation, A: Active in leveraging AI and automation, seen in financial metrics. • Q: Paylocity Elevate solutions impetus and AI, A: Driven by customer demand, AI helps with complex processes, win-win. • Q: Recurring revenue acceleration drivers, A: Go-to-market team performance, services team driving satisfaction. • Q: Broker channel contribution and change, A: Broker channel part of success, momentum seen in last 18 months.