Fourth Quarter and Fiscal 2026
Filed Aug 4, 2026Paylocity Announces Fourth Quarter and Fiscal 2026 Financial Results
Fiscal 2026 recurring and other revenue grew 12.2%, total revenue grew 11.0%, GAAP net income increased 18.8%, and operating and free-cash-flow margins expanded. Fiscal 2027 guidance calls for approximately 8% recurring and other revenue growth and approximately 7% total revenue growth, while the deferred contract-cost benefit-period change is expected to increase Adjusted EBITDA margins by approximately 120–140 basis points.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q4 2026 Recurring & other revenueother | $415.6 million | – | 12.4% |
| Q4 2026 Total revenueGAAP | $444.7 million | – | 11.0% |
| Q4 2026 GAAP operating incomeGAAP | $84.4 million | – | – |
| Q4 2026 non-GAAP operating incomenon-GAAP | $120.2 million | – | – |
| Q4 2026 GAAP net incomeGAAP | $60.3 million | – | – |
| Q4 2026 GAAP net income per shareGAAP | $1.12 per share | – | – |
| Q4 2026 diluted weighted average common shares outstandingGAAP | 54.0 million | – | – |
| Q4 2026 Adjusted EBITDAnon-GAAP | $145.5 million | – | – |
| Q4 2026 Adjusted EBITDA excluding interest income on funds held for clientsnon-GAAP | $116.4 million | – | – |
| Fiscal 2026 Recurring & other revenueother | $1.651 billion | – | 12.2% |
| Fiscal 2026 Total revenueGAAP | $1.771 billion | – | 11.0% |
| Fiscal 2026 GAAP operating incomeGAAP | $386.0 million | – | – |
| Fiscal 2026 non-GAAP operating incomenon-GAAP | $557.3 million | – | – |
| Fiscal 2026 GAAP net incomeGAAP | $269.7 million | – | 18.8% |
| Fiscal 2026 GAAP net income per diluted shareGAAP | $4.92 per diluted share | – | 22.4% |
| Fiscal 2026 diluted weighted average common shares outstandingGAAP | 54.8 million | – | – |
| Fiscal 2026 Adjusted EBITDAnon-GAAP | $654.9 million | – | 12.3% |
| Fiscal 2026 Adjusted EBITDA marginnon-GAAP | 37.0% of Total revenue | – | – |
| Fiscal 2026 Adjusted EBITDA excluding interest income on funds held for clientsnon-GAAP | $534.9 million | – | 16.4% |
| Fiscal 2026 Adjusted EBITDA excluding interest income on funds held for clients marginnon-GAAP | 32.4% of Recurring and other revenue | – | – |
| Fiscal 2026 net cash provided by operating activitiesGAAP | $533.3 million or 30.1% of Total revenue | – | – |
| Fiscal 2026 free cash flownon-GAAP | $427.8 million or 24.2% of Total revenue | – | – |
| Fiscal 2026 free cash flow excluding interest income on funds held for clientsnon-GAAP | $307.8 million or 18.6% of Recurring and other revenue | – | – |
| Cash and cash equivalents at the end of fiscal 2026GAAP | $271.9 million | – | – |
| Long-term debt at the end of fiscal 2026GAAP | $81.3 million | – | – |
First Quarter 2027 and Fiscal 2027 outlook
- RevenueFirst Quarter 2027: Recurring and other revenue is expected to be in the range of $414.0 million to $419.0 million; Total revenue is expected to be in the range of $439.5 million to $444.5 million. Fiscal 2027: Recurring and other revenue is expected to be in the range of $1.777 billion to $1.792 billion; Total revenue is expected to be in the range of $1.880 billion to $1.895 billion.
- NoteFirst Quarter 2027 Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $152.0 million to $156.0 million.
- NoteFirst Quarter 2027 Adjusted EBITDA excluding interest income on funds held for clients, a non-GAAP measure, is expected to be in the range of $126.5 million to $130.5 million.
- NoteFiscal 2027 Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $690.0 million to $700.0 million.
- NoteFiscal 2027 Adjusted EBITDA excluding interest income on funds held for clients, a non-GAAP measure, is expected to be in the range of $587.0 million to $597.0 million.
- NoteBeginning in fiscal 2027, the prospective change in the deferred contract costs amortization period is expected to increase fiscal 2027 Adjusted EBITDA margins by approximately 120–140 basis points.
Capital returns
- Repurchased $398.1 million or 2.8 million shares of common stock during FY 2026.
- $697.8 million or 4.6 million shares repurchased since May 2024.
What drove it
- The company cited continued expansion of average revenue per client and a roughly 7% increase in its client base as drivers of fiscal 2026 growth.
- Paylocity completed the acquisition of Grayscale Labs, Inc. in April 2026 to expand AI-powered recruiting capabilities.
- The company launched Ignite AI, announced Paylocity Retirement, and launched Elevate Solutions during fiscal 2026.
Concerns
- Fiscal 2027 guidance calls for approximately 8% recurring and other revenue growth and approximately 7% total revenue growth, compared with fiscal 2026 growth of 12.2% and 11.0%, respectively.
- The fiscal 2027 Adjusted EBITDA margin outlook includes the expected benefit from extending the deferred contract costs amortization period to 8 years from 7 years.
- Paylocity stated that it is unable to reconcile forward-looking non-GAAP measures in its guidance to directly comparable GAAP measures because needed information is unavailable without unreasonable effort.
What to watch
- First Quarter 2027 recurring and other revenue guidance of $414.0 million to $419.0 million and total revenue guidance of $439.5 million to $444.5 million.
- Fiscal 2027 recurring and other revenue guidance of $1.777 billion to $1.792 billion and total revenue guidance of $1.880 billion to $1.895 billion.
- Fiscal 2027 Adjusted EBITDA guidance of $690.0 million to $700.0 million and Adjusted EBITDA excluding interest income on funds held for clients guidance of $587.0 million to $597.0 million.
- The prospective 8-year amortization period for deferred contract costs and its expected approximately 120–140 basis point impact on fiscal 2027 Adjusted EBITDA margins.
- Expansion of average revenue per client, client-base growth, and the rollout of Ignite AI, Paylocity Retirement, Elevate Solutions, and Grayscale recruiting capabilities.
Balance sheet and cash flow
- Cash and cash equivalents totaled $271.9 million at the end of fiscal 2026.
- Long-term debt totaled $81.3 million as of the end of fiscal 2026, representing borrowings under the credit facility.
- Approximately $81.3 million was repaid on the outstanding balance during fiscal 2026.
- Net cash provided by operating activities for fiscal 2026 was $533.3 million or 30.1% of Total revenue, compared to $418.2 million or 26.2% of Total revenue for fiscal 2025.
- Free cash flow was $427.8 million or 24.2% of Total revenue for fiscal 2026, compared to $342.8 million or 21.5% of Total revenue for fiscal 2025.
- Free cash flow excluding interest income on funds held for clients was $307.8 million or 18.6% of Recurring and other revenue for fiscal 2026, compared to $219.3 million or 14.9% of Recurring and other revenue for fiscal 2025.
Analysis
Paylocity closed fiscal 2026 with Q4 recurring and other revenue of $415.6 million, up 12.4% year-over-year, and total revenue of $444.7 million, up 11.0%. For the full year, recurring and other revenue was $1.651 billion, up 12.2%, while total revenue was $1.771 billion, up 11.0%. Management attributed durable growth to expansion of average revenue per client and a roughly 7% increase in the client base.
Profitability improved across the reported measures. Fiscal 2026 GAAP operating income was $386.0 million versus $304.0 million in fiscal 2025, while non-GAAP operating income was $557.3 million versus $484.4 million. GAAP net income increased 18.8% to $269.7 million and diluted earnings per share increased 22.4% to $4.92 per diluted share. Adjusted EBITDA increased 12.3% to $654.9 million, and its margin was 37.0% of total revenue compared with 36.5% in fiscal 2025.
Cash generation strengthened. Net cash provided by operating activities was $533.3 million, or 30.1% of total revenue, compared with $418.2 million, or 26.2% of total revenue. Free cash flow was $427.8 million, or 24.2% of total revenue, compared with $342.8 million, or 21.5% of total revenue. Paylocity also repurchased $398.1 million, or 2.8 million shares, during fiscal 2026, while cash and cash equivalents totaled $271.9 million and long-term debt totaled $81.3 million at year end.
The fiscal 2027 outlook calls for approximately 8% recurring and other revenue growth and approximately 7% total revenue growth, below the fiscal 2026 reported growth rates. The company expects fiscal 2027 Adjusted EBITDA of $690.0 million to $700.0 million and Adjusted EBITDA excluding interest income on funds held for clients of $587.0 million to $597.0 million. Investors should distinguish underlying operating progress from the prospective accounting change: beginning in fiscal 2027, Paylocity will amortize deferred contract costs over 8 years rather than 7 years, which it expects to increase fiscal 2027 Adjusted EBITDA margins by approximately 120–140 basis points.
Product expansion was a central strategic theme. Paylocity completed the Grayscale Labs acquisition in April 2026, launched Ignite AI, announced Paylocity Retirement, and launched Elevate Solutions. The reported figures show continued revenue growth, higher profitability, stronger cash-flow margins, debt repayment, and substantial repurchases, while the lower fiscal 2027 revenue-growth outlook and accounting-related EBITDA-margin benefit are the principal items requiring attention.
Management, verbatim
Fiscal 26 was a strong year as our differentiated position in the market was reflected in solid sales and operational execution, helping to drive 12.2% recurring and other revenue growth and 11.0% total revenue growth.
Toby Williams, President and Chief Executive Officer
Our durable growth was driven by the continued expansion of average revenue per client and a roughly 7% increase in our client base – while also increasing profitability across our organization.
Toby Williams, President and Chief Executive Officer
Our approach to AI remains focused on driving value for our clients - Ignite AI is woven directly into core workflows to help clients complete tasks faster and surface insights more quickly.
Toby Williams, President and Chief Executive Officer
Not in the filing
stated, not guessed- Consolidated gross profit and gross margin for Q4 2026 and fiscal 2026.
- Segment revenue disclosures beyond recurring and other revenue and total revenue.
- Q4 2026 operating cash flow, free cash flow, cash balance, and debt balance.
- Dividend amount, dividend per share, and dividend declaration information.
- Fiscal 2027 gross margin, operating expense, tax rate, GAAP operating income, GAAP net income, GAAP earnings per share, operating cash flow, and free-cash-flow guidance.
- Previous-period outlook needed to compare actual results with prior guidance.
- GAAP reconciliations for forward-looking non-GAAP guidance.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.