Paylocity (PCTY) Q3 2025 earnings summary

Executive summary

• Q3 2025 total revenue reached $454.5 million, up 13% year-over-year, with recurring and other revenue at $421.1 million, up 15% year-over-year, driven by strong sales execution and client growth.

• Product innovation, including AI Assistant enhancements, new recruiting/onboarding features, and unified HCM and finance platform, continues to drive differentiation and higher average revenue per client.

• Airbase acquisition is fully integrated, expanding spend management capabilities, with positive market feedback and a focus on unified platform rollout.

• Broker/channel referrals remain a key growth driver, representing over 25% of new business in Q3.

• Recognized with multiple industry awards for product and workplace excellence.

Financial highlights

• Adjusted gross profit for Q3 2025 was $350.1 million (77% margin), up from $304.6 million in Q3 FY2024.

• Adjusted EBITDA for Q3 2025 was $197.1 million (43% of revenue), up from $167.9 million in Q3 FY2024; excluding interest income, adjusted EBITDA was $163.6 million.

• GAAP net income for Q3 2025 was $91.5 million ($1.61 per diluted share), up from $85.3 million ($1.50 per share) in Q3 2024.

• Cash and cash equivalents at quarter-end were $477.8 million; $243.8 million outstanding on credit facility related to Airbase acquisition, with $81.3 million repaid in Q3.

• Repurchased $150 million in shares (approx. 800,000 shares) through April 2025; $200 million remains under current program.

Outlook and guidance

• FY25 recurring and other revenue guidance raised to $1.460–$1.465 billion (14% growth); total revenue guidance to $1.580–$1.585 billion (13% growth).

• FY25 Adjusted EBITDA expected at $571–$575 million; excluding interest income, $451–$455 million.

• Q4 2025 recurring and other revenue expected at $358.1–$363.1 million (11% growth); total revenue at $385.5–$390.5 million (9% growth).

• Guidance assumes flat workforce levels in Q4 and continued investment in R&D and sales.

• Long-term targets: $2B+ revenue, 75-80% adjusted gross profit, 35-40% adjusted EBITDA margin, and 20-25% free cash flow margin.