Paylocity Holding PCTY shares have gained 27.5% year-to-date (YTD), compared to the Zacks Internet – Software industry and the Zacks Computer & Technology sector’s returns of 32.6% and 27, respectively. 6%.
In the same time frame, Paylocity Holding had outperformed the stocks of its peers, including Paycom software PAYC, Paychex PAYX and Working day WDAY. On a YTD basis, PAYC and PAYX returned 13.5% and 22% respectively, while WDAY lost 3%.
This outperformance comes from improved sales execution and continued investments in technology upgrades and product innovation.
The company’s initiative to use generative artificial intelligence (AI), along with a strong commitment to driving innovation and delivering the most advanced software platform in the industry, continues to support revenue growth.
The company’s continued efforts in recent acquisitions strengthen its status as the leading provider of cloud-based human capital management (HCM) solutions and payroll software, effectively serving a large and diverse customer base.
Price consensus chart of Paylocity Holding Corporation | Quote from Paylocity Holding Corporation
Paylocity’s latest acquisition of Airbase Inc., a modern financial and expense management software solution that combines invoice/payable automation, expense management, corporate cards and purchasing capabilities, is a significant step.
The acquisition of Airbase significantly strengthens PCTY’s portfolio and delivers essential integrated value to HR and finance leaders by enabling them to manage all their spend on a single platform. This strategic move decisively expands PCTY’s total addressable market beyond HCM and boldly positions the company within the CFO’s office.
The integration of Airbase’s financial solutions with Paylocity’s HCM platform will enable companies to manage all payroll and non-payroll costs through a single interface, delivering real-time visibility, faster financial close, improved planning and stronger financial controls commandments.
Other notable Paylocity acquisitions in recent years include Trace, Cloudsnap and Blue Marble Payroll. These acquisitions have strengthened the company’s portfolio and opened up new growth opportunities.
Paylocity spearheaded the first HCM solutions provider to integrate generative AI into its platform. The company recently unveiled its AI Assistant, an advanced chatbot powered by conversational AI, aimed at improving HR processes and improving the employee experience.
The Paylocity AI Assistant streamlines HR-related tasks by providing real-time contextual support across the platform. This functionality allows customers to efficiently complete administrative tasks and answer employee questions quickly, ultimately improving the efficiency of the Paylocity platform and improving the overall employee experience.
PCTY recently introduced Headcount Planning, a new solution that unites Finance, HR, Talent Acquisition and recruitment managers to promote a more integrated, data-driven approach to workforce planning.
This allows companies to proactively assess their staffing needs across the organization. It helps manage workflows and approvals from the initial forecasting phase to opening new roles. Plus, it provides comprehensive reporting to stay ahead of ever-changing talent needs as employees enter, move, or leave the organization.
For the second quarter of fiscal 2025, PCTY expects total revenues to be between $364 and $369 million, indicating year-over-year growth of 12.3%. The Zacks Consensus Estimate is pegged at $366.8 million, indicating a year-over-year increase of 12.4%.
The consensus earnings mark is set at $1.38 per share, unchanged over the past 60 days, indicating a decline of 7.4% year over year.
Total revenues for 2025 are expected to be between $1.535 billion and $1.550 billion, indicating an increase of approximately 10% year over year. The consensus figure for revenues is set at $1.54 billion.
The consensus earnings estimate is set at $6.50 per share, up 2.5% over the past 60 days, indicating a year-over-year decline of 1.1%.
Ongoing macroeconomic challenges and geopolitical issues have resulted in significant workforce reductions across Paylocity’s customer base. The condition could impact the company’s operations in the form of lower transaction volumes or loss of customers. Potential customers tend to reduce their overall spend on payroll and other HCM services. We believe this could put pressure on Paylocity, reducing its revenue growth potential going forward.
Additionally, Paylocity’s high valuation limits the stock’s potential for upside momentum. PCTY currently trades at a trailing twelve-month price-to-earnings (P/E) ratio of 31.2, significantly higher than the industry average of 26.47.
Paylocity’s 28% YTD rally highlights its strength as a leading player in the HCM space. The company’s long-term prospects appear promising given its continued focus on expanding its portfolio, strategic acquisitions and AI integration. However, the persistent macroeconomic uncertainties and the high valuation of the stock warrant caution.
PCTY currently carries a Zacks Rank #3 (Hold), implying that existing investors should continue to hold the stock while new buyers should wait for a better entry point into the stock. You can see it You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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