Paylocity HoldingPCTY +0.26%71 Gross Margin % is 72.31% as of Mar. 2026, which is 8% above its 10-year median of 66.72. GuruFocus rates PCTY with a GF Score™ of 71/100 and a GF Value™ of $225.43 (Possible Value Trap). The stock has 3 warning signs investors should review. Among 2,683 Software companies, Paylocity Holding ranks better than 79.02% on this metric.
Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
Paylocity Holding had a gross margin of 72.31% for the quarter that ended in Mar. 2026 => Durable competitive advantage
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
Paylocity Holding Gross Margin % Related Terms
Paylocity Holding Gross Margin % Historical Data
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The historical data trend for Paylocity Holding's Gross Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
PCTY vs PEGA, PAYC, IDCC: Gross Margin % Comparison
For the Software - Application subindustry, Paylocity Holding's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Paylocity Holding Gross Margin % vs Software Industry
For the Software industry and Technology sector, Paylocity Holding's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Paylocity Holding's Gross Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
Paylocity Holding (PCTY) has a Gross Margin % of 72.31% as of Mar. 2026. Gross margin is the ratio of total gross profit to net sales. View historical data on Paylocity Holding and its competitors. This is near median its historical median of 66.72. Over the past decade, Paylocity Holding's Gross Margin % has ranged from 57.48 to 69.30. According to the industry distribution chart, Paylocity Holding ranks #563 out of 2683 companies in the Software industry, placing it in the top 21%.
Is Paylocity Holding's Gross Margin % too high?
Paylocity Holding's current Gross Margin % of 72.31% is near median its 10-year median of 66.72. Over the past 10 years, this metric has ranged from a low of 57.48 to a high of 69.30. The Software industry median Gross Margin % is 40.45. Paylocity Holding's value of 72.31% is 78.8% above this industry median. Based on the distribution chart, Paylocity Holding ranks #563 out of 2683 companies in the Software industry, which is in the top quartile — a strong position relative to peers. Overall, Paylocity Holding has a GF Score™ of 71/100 and is considered Possible Value Trap, reflecting its overall financial health beyond just this single metric.
How does Paylocity Holding's Gross Margin % compare to PEGA and PAYC?
According to the Software industry distribution chart, Paylocity Holding ranks #563 out of 2683 companies for Gross Margin %. This places Paylocity Holding in the top 21% of its industry — outperforming the majority of peers. The industry median Gross Margin % is 40.45. Paylocity Holding's value of 72.31% is 78.8% above this benchmark. Historically, Paylocity Holding's own Gross Margin % has ranged from 57.48 to 69.30 over the past decade. While the company's 10-year median is 66.72 vs. the industry median of 40.45, Paylocity Holding has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Gross Margin % for a Software company?
The median Gross Margin % among Software companies is 40.45, based on 2,683 companies in the industry. Companies in the top quartile (top 25%) have a Gross Margin % significantly above this median, while those in the bottom quartile fall well below. However, Gross Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Paylocity Holding's current Gross Margin % of 72.31% is 78.8% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Gross Margin % mean?
A high Gross Margin % can signal that a stock is expensive relative to its fundamentals. Gross margin is the ratio of total gross profit to net sales. View historical data on Paylocity Holding and its competitors. For the Software industry, the median Gross Margin % is 40.45 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Paylocity Holding's current Gross Margin % is 72.31%, which is near median its own 10-year median of 66.72. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Paylocity Holding stock overvalued right now?
Based on GuruFocus' analysis, Paylocity Holding (PCTY) is currently considered Possible Value Trap. The stock's GF Value™ is $225.43, compared to a current price of $104.06 — trading 53.8% below its estimated fair value. The current Gross Margin % is 72.31%, which is near median its 10-year median of 66.72 and 78.8% above the Software industry median of 40.45. Paylocity Holding's overall GF Score™ is 71/100 with 3 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Gross Margin % calculated?
Gross Margin % is calculated from a company's financial statements. For Paylocity Holding (PCTY), the current Gross Margin % is 72.31% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Paylocity Holding (PCTY) Overvalued in 2026?
Based on GuruFocus' analysis, Paylocity Holding stock appears to be undervalued.
The current stock price of $104.06 is trading 53.8% below its estimated GF Value™ of $225.43.
GuruFocus considers Paylocity Holding to be Possible Value Trap.
Key valuation signals for PCTY:
Gross Margin %: 72.31% (near median its 10-year median of 66.72)
GF Value™: $225.43 vs. price of $104.06 (53.8% below fair value)
Industry Position: 78.8% above the Software median (#563 of 2683)
No single metric tells the full story. See the PCTY stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Paylocity is a cloud-based human capital management provider offering payroll, compliance, and human resources management solutions. With the addition of expense and IT management modules, Paylocity unifies back-office operations spanning HR, finance, and IT on a single platform and bills customers on a subscription basis. The firm's customer base skews toward the midmarket and is primarily based in the US. As of fiscal 2025, Paylocity has nearly 42,000 customers.
71GF Score
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