Paylocity Reports 13% Revenue Growth to $454.5 Million in Q3 Fiscal 2025

Paylocity Holding Corporation reported strong financial performance for the third quarter of fiscal year 2025, with total revenues reaching $454.5 million, a 13% increase from $401.3 million in the same period last year. For the nine months ending March 31, 2025, revenues increased by 14% to $1.19 billion, up from $1.05 billion in the prior year. The growth was primarily driven by a 15% rise in recurring and other revenue, which amounted to $421.1 million for the quarter and $1.10 billion for the nine months. Net income for the quarter was $91.5 million, or $1.64 per share, compared to $85.3 million, or $1.51 per share, in the previous year.

The company experienced notable changes in its financial metrics compared to the previous fiscal period. Operating income increased to $127.0 million for the quarter, up from $106.3 million, while operating expenses rose to $197.7 million, reflecting increased investments in sales and marketing, research and development, and general administrative functions. The effective tax rate also increased to 27.7% from 22.9%, primarily due to non-deductible stock-based compensation and state and local taxes.

Strategically, Paylocity expanded its product offerings through the acquisition of Airbase Inc. in October 2024, which enhances its spend management capabilities. This acquisition, valued at approximately $320.2 million, was funded through borrowings under a revolving credit facility. The company also acquired TraceHQ.com, Inc. for $12.1 million, further diversifying its product suite. These acquisitions are expected to bolster Paylocity's competitive position in the human capital management market.

Operationally, Paylocity reported a customer base that continues to grow, with a significant increase in the number of clients utilizing its cloud-based payroll and human capital management solutions. The company’s employee headcount has also increased as it invests in expanding its sales and marketing teams. As of March 31, 2025, Paylocity had $477.8 million in cash and cash equivalents, alongside $3.43 billion in funds held for clients, indicating a solid liquidity position to support ongoing operations and growth initiatives.

Looking ahead, Paylocity remains optimistic about its growth trajectory, driven by its recurring revenue model and high client retention rates. The company plans to continue investing in its platform and expanding its client base, despite potential market uncertainties that could impact revenue growth. Management anticipates that these investments will lead to improved operating leverage and margins over the long term, positioning Paylocity for sustained success in the competitive landscape of human capital management solutions.