Paylocity (PCTY) TD Cowen’s 53rd Annual Technology, Media & Telecom Conference 2025 summary

Demand environment and growth outlook

• Demand has remained stable since Q4 of the prior fiscal year, with minimal disruption and steady performance through Q3 and Q4 guidance periods.

• Employee growth on the platform is flat, a shift from pre-COVID tailwinds, and this trend is expected to persist into FY2026.

• Financial performance has consistently exceeded expectations, with recurring revenue growth in the low to mid-teens off 8% sales headcount growth.

• The company maintains a low market penetration, indicating significant runway for future growth.

Broker channel and M&A impacts

• Over 25% of new business comes from broker referrals, with a focus on non-competing, technology-driven partnerships.

• The broker environment is highly fragmented, offering opportunities to expand relationships and increase share from existing brokers.

• Recent industry M&A (Paycor and Paychex) has not yet caused disruption, but the company is prepared to capitalize on any resulting opportunities.

• The company avoids revenue-sharing incentives, instead building durable broker relationships through technology and service.

Product expansion and Airbase acquisition

• The acquisition of Airbase extends offerings into spend and expense management, targeting the office of the CFO and leveraging HR data for automation.

• Go-to-market strategy focuses on attaching new solutions to payroll/HCM deals and selling back into the existing client base.

• Targets 10%-20% penetration for new offerings over three to five years, with Airbase expected to follow this pattern, albeit possibly on a longer timeline.

• Exploring adjacencies in accounts payable automation and IT onboarding, with future expansion informed by client feedback and market experience.