Q4 2026 Paylocity Holding Corp Earnings Call Transcript
Key Points
- Recurring revenue growth accelerated to 12.4% in Q4 and 12.2% for fiscal 2026, with total revenue reaching approximately $1.8 billion.
- Strong client base expansion, growing 7% to 44,400 clients, alongside a 5% increase in average revenue per client to $37,200.
- Successful launch of Paylocity Ignite AI, with AI interactions nearly doubling quarter-over-quarter, and positive client feedback highlighting productivity gains.
- Strategic acquisitions of Grayscale and Adora are expected to enhance AI-native capabilities in recruiting and leave management, offering new monetization opportunities.
- Solid financial performance with adjusted EBITDA margin expansion of 120 basis points (excluding interest income) and free cash flow margin growth of 370 basis points in fiscal 2026.
- Continued strong revenue retention rate above 92%, reflecting high client satisfaction and platform stickiness.
- Fiscal 2027 guidance assumes flat workforce levels, which may limit growth if employment conditions weaken.
- Revenue growth is expected to decelerate to approximately 8% for recurring revenue and 7% for total revenue in fiscal 2027.
- Adjusted EBITDA margin expansion in fiscal 2027 is modest at 80 basis points, partly due to investments in AI and new product launches.
- The change in deferred contract cost amortization from 7 to 8 years provides a one-time benefit of 120-140 basis points, which may not be sustainable in future years.
- Interest income is expected to decline due to anticipated rate cuts and lower average client fund balances, impacting overall profitability.
- New acquisitions (Grayscale and Adora) are subscale and represent a slight margin headwind in fiscal 2027.
Good day and thank you for standing by. Welcome to the Paylocity Holding Corporation Fourth Quarter 2026 Fiscal Year Results Conference Call. At this time, all participants are in a listen-only mode.
After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again.
Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ryan Glenn, Chief Financial Officer. Please go ahead.
Good afternoon, and welcome to Paylocity's earnings results call for the fourth quarter and fiscal '26, which ended on June 30, 2026. I'm Ryan Glenn, Chief Financial Officer, and joining me on the call today is Steve Beauchamp, Executive Chairman and Toby Williams, President and CEO of Paylocity. Today, we will
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