Paylocity (PCTY) tops FQ2 estimates but shares slide on guidance cut

Paylocity Holding’s (NASDAQ: PCTY) shares tumbled more than 8% in after-hours trading Thursday after the firm reduced guidance for the full year, missing consensus estimates.

For the fiscal second quarter, the HR and payroll software provider reported earnings per share (EPS) of $1.49, which outdid the analyst forecasts of $1.28. The company's revenue for the quarter also exceeded expectations, coming in at $326.4 million compared to the anticipated $324.57 million.

Looking ahead to the third quarter, Paylocity projects its revenue to be between $395.0 million and $399.0 million, slightly below the consensus of $400.5 million. Its forecast for adjusted EBITDA ranges from $153.5 million to $156.5 million, around the middle of the market estimate of $154.5 million.

For the full year, Paylocity has adjusted its revenue outlook to between $1.38 billion and $1.39 billion, from a previous range of $1.41 billion to $1.41 billion, which is also what analysts expected.

The forecast for adjusted EBITDA remains unchanged, with the company expecting it to be between $474.0 million and $478.0 million, closely matching the analyst prediction of $477.7 million.

F2Q was fine, with total revs hitting the top end of guidance and EBITDA beating nicely. However, the FY24 rev guidance was cut by 1.5%. Factoring in F3Q guidance, Recurring revs are expected to exit the year at ~13% y/y, well-below prior consensus expectations for 19%,” Jefferies analysts led by Samad Samana said.

“While a F2H guidance cut was widely expected, the magnitude was slightly worse than we expected. As such, shares will likely be under pressure in the ST as investors reset expectations lower,” they added.

By Vahid Karaahmetovic

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