Paylocity (PCTY) Q2 2025 earnings summary

Executive summary

• Q2 FY25 total revenue reached $377.0M, up 16% year-over-year, with recurring and other revenue at $347.7M, up 17% year-over-year, driven by strong sales, product innovation, and new client additions.

• Product launches, including AI assistant, Benefits Decision Support, and Headcount Planning, increased client adoption and max PEPY to $600.

• Broker referral network contributed over 25% of new business, reflecting strong channel performance and diversified client base.

• Airbase acquisition integration is progressing well, expanding spend management capabilities and receiving positive client feedback.

• Company recognized for workplace culture and product leadership by Forbes, Fortune, Newsweek, TrustRadius, G2, and other industry awards.

Financial highlights

• Adjusted gross profit margin improved to 73.8% year-over-year; adjusted gross profit for Q2 FY25 was $278.2M.

• Adjusted EBITDA reached $126.2M (33.5% margin), exceeding guidance; GAAP net income was $37.5M ($0.66/share).

• Cash and equivalents at quarter-end were $482.4M; $325M in debt outstanding from Airbase acquisition.

• Share repurchases totaled $8.6M (44,000 shares) in Q2 at $197.90 average price; $341M remains authorized.

• Free cash flow margin TTM: ~21%, with expectation to remain above 20% for FY25.

Outlook and guidance

• FY25 recurring and other revenue guidance raised to $1.445–$1.455B (13% growth); total revenue guidance to $1.558–$1.568B (11% growth).

• FY25 adjusted EBITDA expected at $542–$550M; excluding interest income, $429–$437M.

• Q3 recurring and other revenue expected at $410–$415M (12–13% growth); total revenue $439–$444M (10% growth).

• Long-term targets: $2B+ total revenue, 75–80% adjusted gross profit, 35–40% adjusted EBITDA margin, and 20–25% free cash flow margin.

• Guidance reflects prudent assumptions on workforce levels and macro environment; further raises possible if momentum continues.