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Paylocity Announces Second Quarter Fiscal Year 2026 Financial Results
Business
Feb 5 2026
25 min read

Paylocity Announces Second Quarter Fiscal Year 2026 Financial Results

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  • Q2 2026 Recurring & Other Revenue of $387.0 million, up 11.3% year-over-year

  • Q2 2026 Total Revenue of $416.1 million, up 10.4% year-over-year

  • Continued growth in cash flows - trailing twelve months net cash provided by operating activities margin of 28.3% and free cash flow margin of 23.6%

  • Repurchased $100 million or 690,000 shares in Q2 2026; $600 million or 3.7 million shares repurchased since May 2024

SCHAUMBURG, Ill., Feb. 05, 2026 (GLOBE NEWSWIRE) -- Paylocity Holding Corporation (Nasdaq: PCTY), a leading provider of cloud-based HR, Finance, and IT solutions, today announced financial results for the second quarter of fiscal year 2026, which ended December 31, 2025.

“The momentum seen in Q1 continued into the second quarter and contributed to a strong selling season performance and increased revenue and profitability guidance for fiscal 26. Our results continue to be driven by the combination of strong sales, operational execution, and product differentiation – including the addition of new platform capabilities like Benefits Guided Setup to support our clients and broker partners through open enrollment season. Additionally, as highlighted last quarter, we continue to invest in AI and broader automation efforts internally to drive greater efficiency and productivity across our business, as evidenced by our increasing free cash flow and adjusted EBITDA margins. I would also like to thank all of our Paylocity teams as they support our clients through our busiest time of year,” said Toby Williams, President and Chief Executive Officer of Paylocity.

Second Quarter Fiscal 2026 Financial Highlights

Revenue:

  • Recurring & other revenue was $387.0 million, an increase of 11.3% from the second quarter of fiscal year 2025.

  • Total revenue was $416.1 million, an increase of 10.4% from the second quarter of fiscal year 2025.

Operating Income:

  • GAAP operating income was $70.4 million and non-GAAP operating income was $119.1 million in the second quarter of fiscal year 2026 compared to GAAP operating income of $46.6 million and non-GAAP operating income of $101.1 million in the second quarter of fiscal year 2025.

Net Income:

  • GAAP net income was $50.2 million or $0.92 per share in the second quarter of fiscal year 2026 based on 54.8 million diluted weighted average common shares outstanding compared to $37.5 million or $0.66 per share in the second quarter of fiscal year 2025 based on 56.7 million diluted weighted average common shares outstanding.

Adjusted EBITDA:

  • Adjusted EBITDA, a non-GAAP measure, was $142.7 million in the second quarter of fiscal year 2026 compared to $126.2 million in the second quarter of fiscal year 2025.

  • Adjusted EBITDA excluding interest income on funds held for clients, a non-GAAP measure, was $113.6 million in the second quarter of fiscal year 2026 as compared to $96.9 million in the second quarter of fiscal year 2025.

Balance Sheet and Cash Flow:

  • Cash and cash equivalents totaled $162.5 million as of December 31, 2025.

  • Long-term debt totaled $81.3 million as of December 31, 2025, representing borrowings under our credit facility to fund the acquisition of Airbase Inc. on October 1, 2024. This reflects approximately $81.3 million repaid on our outstanding balance during the first six months of fiscal year 2026.

  • Net cash provided by operating activities for the first six months of fiscal year 2026 was $203.5 million compared to $145.7 million for the first six months of fiscal year 2025. Net cash from operating activities for the trailing twelve months ended December 31, 2025 was $476.0 million or 28.3% of total revenue as compared to $393.1 million or 26.2% of total revenue for the trailing twelve months ended December 31, 2024.

  • Free cash flow, a non-GAAP measure, was $396.9 million or 23.6% of total revenue for the trailing twelve months ended December 31, 2025 compared to $315.1 million or 21.0% of total revenue for the trailing twelve months ended December 31, 2024.

A reconciliation of GAAP to non-GAAP financial measures has been provided in this press release in the accompanying tables. Additional information regarding these measures can be found below under the headings “Non-GAAP Financial Measures” and “Definitions of our Non-GAAP Measures.”

Business Outlook

Based on information available as of February 5, 2026, Paylocity is issuing guidance for the third quarter and full fiscal year 2026 as indicated below.

Third Quarter 2026:

  • Recurring and other revenue is expected to be in the range of $457.5 million to $462.5 million, which represents approximately 9%-10% growth over fiscal year 2025 third quarter recurring and other revenue.

  • Total revenue is expected to be in the range of $487.0 million to $492.0 million, which represents approximately 7%-8% growth over fiscal year 2025 third quarter total revenue.

  • Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $200.0 million to $204.0 million.

  • Adjusted EBITDA excluding interest income on funds held for clients, a non-GAAP measure, is expected to be in the range of $170.5 million to $174.5 million.

Fiscal Year 2026:

  • Recurring and other revenue is expected to be in the range of $1.620 billion to $1.630 billion, which represents approximately 10%-11% growth over fiscal year 2025 recurring and other revenue.

  • Total revenue is expected to be in the range of $1.732 billion to $1.742 billion, which represents approximately 9% growth over fiscal year 2025 total revenue.

  • Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $622.5 million to $630.5 million.

  • Adjusted EBITDA excluding interest income on funds held for clients, a non-GAAP measure, is expected to be in the range of $510.5 million to $518.5 million.

We are unable to reconcile the forward-looking non-GAAP measures set forth above to their directly comparable GAAP financial measures because the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort.

Conference Call Details

Paylocity will host a conference call to discuss its second quarter fiscal year 2026 results at 4:00 p.m. Central Time today (5:00 p.m. Eastern Time). A live audio webcast of the conference call along with detailed financial information can be accessed through https://investors.paylocity.com/events-and-presentations where dial in details are provided. A replay of the call will be available and archived via webcast at https://investors.paylocity.com/.

About Paylocity

Headquartered in Schaumburg, IL, Paylocity is an award-winning provider of HR, finance, and IT software solutions through ONE unified platform. Founded in 1997 and publicly traded since 2014, Paylocity offers an intuitive, easy-to-use product suite that helps businesses automate and streamline HR and payroll processes, attract and retain talent, and build culture and connection with their employees. Known for its unique culture and consistently recognized as one of the best places to work, Paylocity accompanies its clients on the journey to create great workplaces and help all employees achieve their best. For more information, visit www.paylocity.com.

Non-GAAP Financial Measures

The company uses certain non-GAAP financial measures when reporting and discussing its financial results, including the financial measures in this release that are designated as being “non-GAAP.” Management presents certain non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance, as they provide investors with the company’s view of its financial performance. Management uses non-GAAP financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance, including comparisons of current results to prior periods’ results by excluding items the company does not believe reflect fundamental business performance and are not representative or indicative of its results of operations. Non-GAAP financial measures have limitations as an analytical tool and other companies may define their non-GAAP financial measures differently than we do. Investors are encouraged to review the reconciliation of the non-GAAP measures to their most directly comparable GAAP measures provided in the accompanying tables to this release, as well as the definitions of those non-GAAP measures following such tables.

Safe Harbor/Forward Looking Statements

This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included herein regarding Paylocity’s future operations, future financial position and performance, anticipated results of operations, prospects, plans and objectives of management are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “seek” and similar expressions (or the negative of these terms) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include statements about management's estimates regarding future revenues and financial performance, and other statements about management’s beliefs, intentions or goals and are expressed in good faith and believed to be reasonable at the time such statements are made. Paylocity may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on such statements. These forward-looking statements involve risks and uncertainties, many of which are beyond Paylocity’s control, that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements. Factors that could cause actual results or events to differ materially from what is presented include, but are not limited to, the general economic conditions in regions in which Paylocity does business, changes in interest rates, business disruptions, reductions in employment and increases in business failures that have occurred or may occur in the future; Paylocity’s ability to leverage AI Assist and other forms of artificial intelligence and machine learning in its technology, which may be constrained by current and future laws, regulations, interpretive positions or standards governing new and evolving technologies and ethical considerations that could restrict or impose burdensome and costly requirements on its ability to continue to leverage data in innovative ways; Paylocity’s ability to retain existing clients and to attract new clients to enter into subscriptions for its services; the challenges associated with a growing company’s ability to effectively service clients in a dynamic and competitive market; challenges associated with expanding and evolving a sales organization to effectively address new geographies and products and services; challenges related to cybersecurity threats and evolving cybersecurity regulations; Paylocity’s reliance on and ability to expand its referral network of third parties; difficulties associated with accurately forecasting revenue and appropriately planning expenses; challenges with managing growth effectively; risks related to acquisitions and investments in other businesses and technologies; risks related to regulatory, legislative and judicial uncertainty in Paylocity’s markets; Paylocity’s ability to protect and defend its intellectual property and its use of open source software in its products; the risk that Paylocity’s security measures are compromised or a threat actor gains unauthorized access to customer data; unexpected events in the market for Paylocity’s solutions; changes in the competitive environment in Paylocity’s industry and the markets in which it operates; adverse changes in general economic or market conditions; changes in the employment rates of Paylocity’s clients and the resultant impact on revenue; the possibility that Paylocity may be adversely affected by other economic, business, and/or competitive factors; and other risks and potential factors that could affect Paylocity’s business and financial results that are identified in Paylocity’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on August 6, 2025, as well as any revisions or supplements to the information in subsequent reports filed or furnished to the SEC. These forward-looking statements represent Paylocity’s expectations as of the date of this press release. Subsequent events may cause these expectations to change, and unless legally required, Paylocity disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.

PAYLOCITY HOLDING CORPORATION
Unaudited Consolidated Balance Sheets
(in thousands, except per share data)

 

 

 

 

 

 

 

June 30,
2025

 

December 31,
2025

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

398,070

 

 

$

162,495

 

Accounts receivable, net

 

41,642

 

 

 

44,014

 

Deferred contract costs

 

117,177

 

 

 

124,651

 

Prepaid expenses and other

 

50,943

 

 

 

52,541

 

Total current assets before funds held for clients

 

607,832

 

 

 

383,701

 

Funds held for clients

 

2,704,137

 

 

 

5,510,227

 

Total current assets

 

3,311,969

 

 

 

5,893,928

 

Capitalized internal-use software, net

 

132,317

 

 

 

134,617

 

Property and equipment, net

 

54,210

 

 

 

54,379

 

Operating lease right-of-use assets

 

35,997

 

 

 

33,865

 

Intangible assets, net

 

92,671

 

 

 

82,235

 

Goodwill

 

343,100

 

 

 

343,158

 

Long-term deferred contract costs

 

393,671

 

 

 

409,005

 

Long‑term prepaid expenses and other

 

7,739

 

 

 

7,401

 

Deferred income tax assets

 

17,754

 

 

 

14,196

 

Total assets

$

4,389,428

 

 

$

6,972,784

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

17,347

 

 

$

7,299

 

Accrued expenses

 

193,081

 

 

 

171,573

 

Total current liabilities before client fund obligations

 

210,428

 

 

 

178,872

 

Client fund obligations

 

2,694,842

 

 

 

5,499,182

 

Total current liabilities

 

2,905,270

 

 

 

5,678,054

 

Long-term debt

 

162,500

 

 

 

81,250

 

Long-term operating lease liabilities

 

46,772

 

 

 

44,042

 

Other long-term liabilities

 

8,580

 

 

 

8,713

 

Deferred income tax liabilities

 

32,559

 

 

 

62,410

 

Total liabilities

$

3,155,681

 

 

$

5,874,469

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2025 and December 31, 2025

$

 

 

$

 

Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2025 and December 31, 2025; 55,366 shares issued and outstanding at June 30, 2025 and 53,873 shares issued and outstanding at December 31, 2025

 

55

 

 

 

54

 

Additional paid-in capital

 

327,518

 

 

 

93,148

 

Retained earnings

 

900,583

 

 

 

998,771

 

Accumulated other comprehensive income

 

5,591

 

 

 

6,342

 

Total stockholders' equity

$

1,233,747

 

 

$

1,098,315

 

Total liabilities and stockholders’ equity

$

4,389,428

 

 

$

6,972,784

 

 

 

 

 

 

 

 

 


PAYLOCITY HOLDING CORPORATION
Unaudited Consolidated Statements of Operations and Comprehensive Income
(in thousands, except per share data)

 

 

 

 

 

 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

2024

 

2025

 

2024

 

2025

Revenues:

 

 

 

 

 

 

 

 

 

Recurring and other revenue

$

347,714

 

 

$

386,980

 

 

$

680,819

 

 

$

765,838

 

Interest income on funds held for clients

 

29,266

 

 

 

29,154

 

 

 

59,117

 

 

 

58,468

 

Total revenues

 

376,980

 

 

 

416,134

 

 

 

739,936

 

 

 

824,306

 

Cost of revenues

 

124,545

 

 

 

133,996

 

 

 

239,505

 

 

 

262,376

 

Gross profit

 

252,435

 

 

 

282,138

 

 

 

500,431

 

 

 

561,930

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Sales and marketing

 

93,133

 

 

 

98,078

 

 

 

181,564

 

 

 

194,446

 

Research and development

 

56,155

 

 

 

57,739

 

 

 

103,415

 

 

 

113,346

 

General and administrative

 

56,524

 

 

 

55,940

 

 

 

104,685

 

 

 

109,546

 

Total operating expenses

 

205,812

 

 

 

211,757

 

 

 

389,664

 

 

 

417,338

 

Operating income

 

46,623

 

 

 

70,381

 

 

 

110,767

 

 

 

144,592

 

Other income (expense)

 

193

 

 

 

(204

)

 

 

4,935

 

 

 

498

 

Income before income taxes

 

46,816

 

 

 

70,177

 

 

 

115,702

 

 

 

145,090

 

Income tax expense

 

9,351

 

 

 

19,980

 

 

 

28,664

 

 

 

46,902

 

Net income

$

37,465

 

 

$

50,197

 

 

$

87,038

 

 

$

98,188

 

Other comprehensive income (loss), net of tax

 

(5,658

)

 

 

72

 

 

 

1,153

 

 

 

751

 

Comprehensive income

$

31,807

 

 

$

50,269

 

 

$

88,191

 

 

$

98,939

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

Basic

$

0.67

 

 

$

0.93

 

 

$

1.56

 

 

$

1.80

 

Diluted

$

0.66

 

 

$

0.92

 

 

$

1.54

 

 

$

1.77

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares used in computing net income per share:

 

 

 

 

 

 

 

 

 

Basic

 

55,826

 

 

 

54,086

 

 

 

55,733

 

 

 

54,550

 

Diluted

 

56,740

 

 

 

54,773

 

 

 

56,536

 

 

 

55,342

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises for each of the three and six months ended December 31 are included in the above line items:

 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

2024

 

2025

 

2024

 

2025

Cost of revenues

$

6,007

 

 

$

5,294

 

 

$

10,930

 

 

$

9,841

 

Sales and marketing

 

10,663

 

 

 

10,054

 

 

 

20,415

 

 

 

19,250

 

Research and development

 

11,861

 

 

 

10,295

 

 

 

22,172

 

 

 

20,182

 

General and administrative

 

16,379

 

 

 

17,541

 

 

 

27,053

 

 

 

33,835

 

Total stock-based compensation expense and employer payroll taxes related to stock releases and option exercises

$

44,910

 

 

$

43,184

 

 

$

80,570

 

 

$

83,108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


PAYLOCITY HOLDING CORPORATION
Unaudited Consolidated Statements of Cash Flows
(in thousands)

 

 

 

Six Months Ended
December 31,

 

2024

 

2025

Cash flows from operating activities:

 

 

 

Net income

$

87,038

 

 

$

98,188

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Stock-based compensation expense

 

77,206

 

 

 

80,090

 

Depreciation and amortization expense

 

47,212

 

 

 

55,256

 

Deferred income tax expense (benefit)

 

(126

)

 

 

33,056

 

Provision for credit losses

 

617

 

 

 

939

 

Net accretion of discounts on available-for-sale securities

 

(1,277

)

 

 

(818

)

Other

 

577

 

 

 

550

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(4,144

)

 

 

(3,304

)

Deferred contract costs

 

(25,861

)

 

 

(22,445

)

Prepaid expenses and other

 

(20,266

)

 

 

(2,558

)

Accounts payable

 

(4,327

)

 

 

(10,059

)

Accrued expenses and other

 

(10,993

)

 

 

(25,440

)

Net cash provided by operating activities

 

145,656

 

 

 

203,455

 

Cash flows from investing activities:

 

 

 

Purchases of available-for-sale securities

 

(66,122

)

 

 

(115,334

)

Proceeds from sales and maturities of available-for-sale securities

 

80,018

 

 

 

126,413

 

Capitalized internal-use software costs

 

(29,597

)

 

 

(31,400

)

Purchases of property and equipment

 

(5,313

)

 

 

(7,160

)

Acquisitions of businesses, net of cash and funds held for clients acquired

 

(278,001

)

 

 

 

Other investing activities

 

(1,951

)

 

 

(7

)

Net cash used in investing activities

 

(300,966

)

 

 

(27,488

)

Cash flows from financing activities:

 

 

 

Net change in client fund obligations

 

545,384

 

 

 

2,804,340

 

Borrowings under credit facility

 

325,000

 

 

 

 

Repayment of credit facility

 

 

 

 

(81,250

)

Repurchases of common shares

 

(8,395

)

 

 

(300,000

)

Proceeds from employee stock purchase plan

 

10,561

 

 

 

9,534

 

Taxes paid related to net share settlement of equity awards

 

(37,005

)

 

 

(28,609

)

Other financing activities

 

(20

)

 

 

(339

)

Net cash provided by financing activities

 

835,525

 

 

 

2,403,676

 

Net change in cash, cash equivalents and funds held for clients' cash and cash equivalents

 

680,215

 

 

 

2,579,643

 

Cash, cash equivalents and funds held for clients' cash and cash equivalents—beginning of period

 

2,845,669

 

 

 

2,482,526

 

Cash, cash equivalents and funds held for clients' cash and cash equivalents—end of period

$

3,525,884

 

 

$

5,062,169

 

Supplemental Disclosure of Non-Cash Investing and Financing Activities

 

 

 

Purchases of property and equipment and capitalized internal-use software, accrued but not paid

$

471

 

 

$

2,941

 

Liabilities assumed for acquisitions

$

55,730

 

 

$

 

Supplemental Disclosure of Cash Flow Information

 

 

 

Cash paid for interest

$

5,179

 

 

$

3,451

 

Cash paid for income taxes

$

45,968

 

 

$

15,330

 

Reconciliation of cash, cash equivalents and funds held for clients' cash and cash equivalents to the Consolidated Balance Sheets

 

 

 

Cash and cash equivalents

$

482,364

 

 

$

162,495

 

Funds held for clients' cash and cash equivalents

 

3,043,520

 

 

 

4,899,674

 

Total cash, cash equivalents and funds held for clients' cash and cash equivalents

$

3,525,884

 

 

$

5,062,169

 

 

 

 

 

 

 

 

 


Paylocity Holding Corporation
Reconciliation of GAAP to non-GAAP Financial Measures
(In thousands except per share data) 


 

 

 

 

 

 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

2024

 

2025

 

2024

 

2025

Reconciliation from Gross profit to Adjusted gross profit:

 

 

 

 

 

 

 

 

 

 

Gross profit

$

252,435

 

 

$

282,138

 

 

$

500,431

 

 

$

561,930

 

Amortization of capitalized internal-use software costs

 

14,833

 

 

 

17,718

 

 

 

28,610

 

 

 

34,968

 

Amortization of certain acquired intangibles

 

4,749

 

 

 

4,519

 

 

 

6,813

 

 

 

9,120

 

Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises

 

6,007

 

 

 

5,294

 

 

 

10,930

 

 

 

9,841

 

Other items (1)

 

218

 

 

 

(133

)

 

 

140

 

 

 

342

 

Adjusted gross profit

$

278,242

 

 

$

309,536

 

 

$

546,924

 

 

$

616,201

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

2024

 

2025

 

2024

 

2025

Reconciliation from Operating income to Non-GAAP Operating income:

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

46,623

 

 

$

70,381

 

 

$

110,767

 

 

$

144,592

 

Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises

 

44,910

 

 

 

43,184

 

 

 

80,570

 

 

 

83,108

 

Amortization of acquired intangibles

 

5,678

 

 

 

5,175

 

 

 

8,225

 

 

 

10,436

 

Other items (2)

 

3,934

 

 

 

352

 

 

 

6,462

 

 

 

2,116

 

Non-GAAP Operating income

$

101,145

 

 

$

119,092

 

 

$

206,024

 

 

$

240,252

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

2024

 

2025

 

2024

 

2025

Reconciliation from Net income to Non-GAAP Net income:

 

 

 

 

 

 

 

 

 

Net income

$

37,465

 

 

$

50,197

 

 

$

87,038

 

 

$

98,188

 

Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises

 

44,910

 

 

 

43,184

 

 

 

80,570

 

 

 

83,108

 

Amortization of acquired intangibles

 

5,678

 

 

 

5,175

 

 

 

8,225

 

 

 

10,436

 

Other items (2)

 

3,934

 

 

 

352

 

 

 

6,462

 

 

 

2,116

 

Income tax effect on adjustments (3)

 

(5,976

)

 

 

2,164

 

 

 

(2,668

)

 

 

4,884

 

Non-GAAP Net income

$

86,011

 

 

$

101,072

 

 

$

179,627

 

 

$

198,732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

2024

 

2025

 

2024

 

2025

Calculation of Non-GAAP Net income per share:

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Net income

$

86,011

 

 

$

101,072

 

 

$

179,627

 

 

$

198,732

 

Diluted weighted-average number of common shares

 

56,740

 

 

 

54,773

 

 

 

56,536

 

 

 

55,342

 

Non-GAAP Net income per share

$

1.52

 

 

$

1.85

 

 

$

3.18

 

 

$

3.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

2024

 

2025

 

2024

 

2025

Reconciliation from Net income to Adjusted EBITDA and Adjusted EBITDA excluding interest income on funds held for clients

 

 

 

 

 

 

 

Net income

$

37,465

 

 

$

50,197

 

 

$

87,038

 

 

$

98,188

 

Interest expense

 

4,846

 

 

 

1,215

 

 

 

5,246

 

 

 

3,570

 

Income tax expense

 

9,351

 

 

 

19,980

 

 

 

28,664

 

 

 

46,902

 

Depreciation and amortization expense

 

25,660

 

 

 

27,803

 

 

 

47,212

 

 

 

55,256

 

EBITDA

 

77,322

 

 

 

99,195

 

 

 

168,160

 

 

 

203,916

 

Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises

 

44,910

 

 

 

43,184

 

 

 

80,570

 

 

 

83,108

 

Other items (2)

 

3,934

 

 

 

352

 

 

 

6,462

 

 

 

2,116

 

Adjusted EBITDA

$

126,166

 

 

$

142,731

 

 

$

255,192

 

 

$

289,140

 

Interest income on funds held for clients

 

(29,266

)

 

 

(29,154

)

 

 

(59,117

)

 

 

(58,468

)

Adjusted EBITDA excluding interest income on funds held for clients

$

96,900

 

 

$

113,577

 

 

$

196,075

 

 

$

230,672

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

2024

 

2025

 

2024

 

2025

Reconciliation of Non-GAAP sales and marketing:

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

$

93,133

 

 

$

98,078

 

 

$

181,564

 

 

$

194,446

 

Less: Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises

 

10,663

 

 

 

10,054

 

 

 

20,415

 

 

 

19,250

 

Less: Other items (2)

 

520

 

 

 

246

 

 

 

629

 

 

 

362

 

Non-GAAP sales and marketing

$

81,950

 

 

$

87,778

 

 

$

160,520

 

 

$

174,834

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

2024

 

2025

 

2024

 

2025

Reconciliation of Non-GAAP total research and development:

 

 

 

 

 

 

 

 

 

 

 

Research and development

$

56,155

 

 

$

57,739

 

 

$

103,415

 

 

$

113,346

 

Add: Capitalized internal-use software costs

 

14,387

 

 

 

15,940

 

 

 

29,597

 

 

 

31,400

 

Less: Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises

 

11,861

 

 

 

10,295

 

 

 

22,172

 

 

 

20,182

 

Less: Other items (2)

 

890

 

 

 

52

 

 

 

1,011

 

 

 

638

 

Non-GAAP total research and development

$

57,791

 

 

$

63,332

 

 

$

109,829

 

 

$

123,926

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Three Months Ended
December 31,

 

Six Months Ended
December 31,

 

2024

 

2025

 

2024

 

2025

Reconciliation of Non-GAAP general and administrative:

 

 

 

 

 

 

 

 

 

 

 

General and administrative

$

56,524

 

 

$

55,940

 

 

$

104,685

 

 

$

109,546

 

Less: Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises

 

16,379

 

 

 

17,541

 

 

 

27,053

 

 

 

33,835

 

Less: Amortization of certain acquired intangibles

 

929

 

 

 

656

 

 

 

1,412

 

 

 

1,316

 

Less: Other items (2)

 

2,306

 

 

 

187

 

 

 

4,682

 

 

 

774

 

Non-GAAP general and administrative

$

36,910

 

 

$

37,556

 

 

$

71,538

 

 

$

73,621

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Six Months Ended
December 31,

 

Trailing
Twelve Months Ended
December 31,

 

2024

 

2025

 

2024

 

2025

Reconciliation of Free cash flow, Free cash flow excluding interest income on funds held for clients and Adjusted free cash flow excluding interest income on funds held for clients:

 

 

 

 

 

 

 

Net cash provided by operating activities

$

145,656

 

 

$

203,455

 

 

$

393,114

 

 

$

476,025

 

Capitalized internal-use software costs

 

(29,597

)

 

 

(31,400

)

 

 

(60,840

)

 

 

(64,205

)

Purchases of property and equipment

 

(5,313

)

 

 

(7,160

)

 

 

(17,199

)

 

 

(14,920

)

Free cash flow

$

110,746

 

 

$

164,895

 

 

$

315,075

 

 

$

396,900

 

Less: Interest income on funds held for clients

 

(59,117

)

 

 

(58,468

)

 

 

(126,106

)

 

 

(122,771

)

Free cash flow excluding interest income on funds held for clients

$

51,629

 

 

$

106,427

 

 

$

188,969

 

 

$

274,129

 

Cash paid for other items (4)

 

5,073

 

 

 

5,215

 

 

 

 

 

Adjusted free cash flow excluding interest income on funds held for clients

$

56,702

 

 

$

111,642

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Represents acquisition-related costs and severance cost adjustments related to certain roles that have been eliminated. We exclude one-off severance costs that we incur as part of the normal course of our business operations.

(2) Represents acquisition and transaction-related costs and severance costs related to certain roles that have been eliminated. We exclude one-off severance costs that we incur as part of the normal course of our business operations.

(3) Includes the income tax effect on non-GAAP net income adjustments related to stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, amortization of acquired intangibles and other items, which include acquisition and transaction-related costs and severance costs related to certain roles that have been eliminated. We exclude one-off severance costs that we incur as part of the normal course of our business operations.

(4) Represents cash paid for acquisition and transaction-related costs and severance costs related to certain roles that have been eliminated.

Definitions of our Non-GAAP Measures

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA Excluding Interest Income on Funds Held for Clients, and Adjusted EBITDA Excluding Interest Income on Funds Held for Clients Margin

Adjusted EBITDA is calculated as net income before interest expense, income tax expense, and depreciation and amortization expense, adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and other items as described above in this release. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenues.

Adjusted EBITDA excluding interest income on funds held for clients is calculated in the same manner as Adjusted EBITDA and is further adjusted to eliminate interest income on funds held for clients. Adjusted EBITDA excluding interest income on funds held for clients margin is Adjusted EBITDA excluding interest income on funds held for clients divided by recurring and other revenue.

Adjusted Gross Profit and Adjusted Gross Profit Margin

Adjusted gross profit is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, the amortization of capitalized internal-use software costs and certain acquired intangibles and other items as described above in this release.

Adjusted gross profit margin is calculated as adjusted gross profit as described in the preceding sentence divided by total revenues.

Non-GAAP Operating Income, Non-GAAP Net Income, and Non-GAAP Income Per Share

Non-GAAP operating income is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, the amortization of acquired intangibles and other items as described above in this release.

Non-GAAP net income and non-GAAP net income per share are adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, the amortization of acquired intangibles and other items as described above in this release, including the income tax effect on these items.

Non-GAAP Sales and Marketing Expense, Non-GAAP Sales and Marketing Expense Margin, Non-GAAP Total Research and Development, Non-GAAP Total Research and Development Margin, Non-GAAP General and Administrative Expense, and Non-GAAP General and Administrative Expense Margin

Non-GAAP sales and marketing expense is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and other items as described above in this release. Non-GAAP sales and marketing margin is calculated by dividing non-GAAP sales and marketing by total revenues.

Non-GAAP total research and development is adjusted for capitalized internal-use software costs paid and to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and other items as described above in this release. Non-GAAP total research and development margin is calculated by dividing non-GAAP total research and development by total revenues.

Non-GAAP general and administrative expense is adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, the amortization of certain acquired intangibles and other items as described above in this release. Non-GAAP general and administrative margin is calculated by dividing non-GAAP general and administrative expense by total revenues.

Free Cash Flow, Free Cash Flow Margin, Free Cash Flow Excluding Interest on Funds Held for Clients, Free Cash Flow Excluding Interest on Funds Held for Clients Margin, Adjusted Free Cash Flow Excluding Interest Income on Funds Held for Clients and Adjusted Free Cash Flow Excluding Interest Income on Funds Held for Clients Margin

Free cash flow is defined as net cash provided by operating activities less capitalized internal-use software costs and purchases of property and equipment. Free cash flow margin is calculated by dividing free cash flow by total revenues.

Free cash flow excluding interest income on funds held for clients is defined in the same manner as free cash flow but also excludes interest income on funds held for clients. Free cash flow margin excluding interest income on funds held for clients is calculated by dividing free cash flow excluding interest income on funds held for clients by recurring and other revenue.

Adjusted free cash flow excluding interest income on funds held for clients is defined in the same manner as free cash flow excluding interest income on funds held for clients plus cash paid for other items as described above in this release. Adjusted free cash flow margin excluding interest income on funds held for clients is calculated by dividing adjusted free cash flow excluding interest income on funds held for clients by recurring and other revenue.