On this page of StockholderLetter.com we present the latest annual shareholder letter from Paylocity Holding Corp — ticker symbol PCTY. Reading current and past PCTY letters to shareholders can bring important insights into the investment thesis.
Annual Report 2024
Annual Report 2024 Message from our President and Chief Executive Officer In fiscal 2024, Paylocity continued to experience significant growth. Our total revenue was $1.4B, an increase of 19% year over year, as our focus on delivering the most complete platform for the modern workforce continued to differentiate us from competitors and resonate with clients and prospects. We were also particularly pleased with our increased profitability in fiscal 2024, with adjusted EBITDA of $505.6M or 36% margin, adjusted EBITDA excluding interest income on funds held for clients of $384.7M or 30% margin, free cash flow of $305.9M or 22% margin, and free cash flow excluding interest income on funds held for clients of $185.1M or 14% margin.* Innovation is at the heart of our business, driving our product development and inspiring our people. We launched several new premium products and enhancements in fiscal 2024, including Recognition & Rewards, Employee Voice, Advanced Scheduling, Market Pay, and a reimagined mobile app experience. These new product offerings have gained early traction, with our mobile app rated as one of the highest in the software industry. A majority of employee interactions on the platform now occur via mobile. Paylocity also leads the industry in our integration of AI following a successful first-to-market launch with generative AI capabilities in fiscal 2023. New product enhancements across our platform in Learning, Recruiting, and our online collaboration hub, Community, have enabled clients to leverage more than 500,000 AI-assisted engagements. Our product development investments and resulting client satisfaction continue to be recognized by third parties. Independent product review sites G2 Crowd and TrustRadius have consistently ranked Paylocity as a top HCM provider. This year, for the first time, Gartner named Paylocity to its annual Voice of the Customer report for Cloud HCM Suites for 1,000+ Employee Enterprises. Other industry analyst firms such as NelsonHall and Constellation Research have increasingly added Paylocity to their HCM leader quadrants and shortlist rankings. We also continued investing in our go-to-market efforts, adding new sales reps and scaling our referral channel, lead generation, brand, and event initiatives. We grew our client base by approximately 8% in fiscal 2024, closing the year with 39,050 clients, with significant growth opportunities on the horizon. In the past year and $1.4B 19% Total revenue YoY growth Adjusted EBITDA Adjusted EBITDA Margin $505.6M Adjusted EBITDA excluding interest income on funds held for clients 36% 410bps YoY leverage Margin of 30% $384.7M 280bps YoY leverage Free cash flow Free cash flow margin $305.9M 22% 340bps YoY leverage Paylocity recognized by Gartner Peer Insights Voice of the Customer for Cloud HCM Suites for 1,000+ Employee Enterprises *Refer to Financial Highlights and Appendix A for additional details on non-GAAP financial measures.
throughout our history, we ve remained focused on delivering world-class service. This combination of strong operational execution and industry-leading products allowed us to, once again, achieve more than 92% revenue retention in fiscal 2024. Our success would not be possible without the dedication of our more than 6,400 employees, who work closely with our clients every day. We cultivate an active, engaged culture through our Corporate Social Responsibility efforts, which center around the three pillars of our mission: supporting our people, uplifting our communities, and sustainability. 39K+ Clients 92%+ Revenue Retention 6M+ Employees on Platform 6,400+ Employees Headquarters Schaumburg, IL A key component of our thriving culture is our commitment to diversity, equity, inclusion, and accessibility (DEIA). In fiscal 2024, we expanded membership on our Diversity Leadership Council while our Employee Resource Groups led numerous education programs and volunteer opportunities. Our ongoing endeavors to foster an inclusive workplace have been recognized by Forbes, Newsweek, and Built-In, among others, and we were again certified as a Great Place to Work for 2024. Equally important to our Corporate Responsibility is our regard for protecting our clients data through stringent governance programs. The ethical use of this data guides all our business practices. You can read more about our CSR efforts in our report or on the Corporate Responsibility section of our website. As we carry this momentum into fiscal 2025, we extend our gratitude to our employees, clients, and partners for their invaluable contributions to a successful fiscal 2024. Toby Williams President and Chief Executive Officer
Annual Report 2024 | Innovation & Product Innovation Delivering Experiences Employees Crave with Automation and Insights HR Needs While traditional HR and payroll providers focus on automating basic HR processes such as payroll and benefits administration, Paylocity combines these capabilities with the tools that HR and businesses need to compete for talent and deliver against the expectations of the modern workforce. Single Platform with Flexible Data The foundation of our platform is a single employee system of record and end-to-end capabilities to support the employee lifecycle, ensuring efficiency and compliance: Recruiting & Onboarding, Payroll, Time & Labor, HR, Benefits, Learning, and Performance & Compensation. We also make it easy to connect Paylocity with other business systems through hundreds of integrations with benefits, 401(k), and other providers and open APIs. Employee Experience The modern workforce wants to feel heard and valued, foster connection across their organization, and prioritize flexibility and well-being. Paylocity offers employee-focused features like native video, social collaboration, recognition and rewards, chat, and more that enable employers to deliver against these expectations even those who are remote, on-the-go, or don t have corporate email addresses. Insights, Recommendations, and AI Access to employee data and reporting for compliance meets the basic needs of most companies, but we take it a step further by providing actionable insights powered by AI based on best practices across our 39,050 clients. With interactive dashboards to interpret data, clients get prescriptive recommendations tailored to improving efficiency and building a healthier workforce, and use AI-assisted tools to automate day-to-day tasks. Unmatched Customer Service We move Forward Together with clients by building deep, long-lasting partnerships. From initial implementation to ongoing service, we have a track record of going beyond the transactional to move clients toward their strategic goals. We also consider clients our co-creators, regularly soliciting and prioritizing their feedback in our product roadmap.
Product The Most Complete Platform for the Modern Workforce Payroll SaaS-based payroll Global payroll Tax filing, direct deposit On Demand Payment Employee Experience Community Video Recognition & Rewards Employee Voice Human Resources Single platform for HR & payroll Employee Self-Service Compliance & record keeping Workflows & Documents Time & Labor Time & Attendance Scheduling Time Collection Talent Recruiting Onboarding Performance Compensation Learning Benefits Benefit enrollment & updates Advanced reporting TPA solutions
 • shareholder letter icon 10/24/2024 Letter Continued (Full PDF)
 • stockholder letter icon 10/20/2023 PCTY Stockholder Letter
 • stockholder letter icon More "Application Software" Category Stockholder Letters
 • Benford's Law Stocks icon PCTY Benford's Law Stock Score = 84


PCTY Shareholder/Stockholder Letter Transcript:

Annual Report
2024

Annual Report 2024
Message from our
President and Chief Executive Officer
In fiscal 2024, Paylocity continued to experience significant growth. Our total revenue was $1.4B, an increase of
19% year over year, as our focus on delivering the most complete platform for the modern workforce continued
to differentiate us from competitors and resonate with clients and prospects. We were also particularly pleased
with our increased profitability in fiscal 2024, with adjusted EBITDA of $505.6M or 36% margin, adjusted
EBITDA excluding interest income on funds held for clients of $384.7M or 30% margin, free cash flow of $305.9M
or 22% margin, and free cash flow excluding interest income on funds held for clients of $185.1M or 14% margin.*
Innovation is at the heart of our business, driving
our product development and inspiring our people.
We launched several new premium products and
enhancements in fiscal 2024, including Recognition
& Rewards, Employee Voice, Advanced Scheduling,
Market Pay, and a reimagined mobile app experience.
These new product offerings have gained early traction,
with our mobile app rated as one of the highest in the
software industry. A majority of employee interactions
on the platform now occur via mobile.
Paylocity also leads the industry in our integration of
AI following a successful first-to-market launch with
generative AI capabilities in fiscal 2023. New product
enhancements across our platform in Learning,
Recruiting, and our online collaboration hub, Community,
have enabled clients to leverage more than 500,000
AI-assisted engagements.
Our product development investments and resulting
client satisfaction continue to be recognized by third
parties. Independent product review sites G2 Crowd and
TrustRadius have consistently ranked Paylocity as a top
HCM provider. This year, for the first time, Gartner named
Paylocity to its annual Voice of the Customer report for
Cloud HCM Suites for 1,000+ Employee Enterprises. Other
industry analyst firms such as NelsonHall and Constellation
Research have increasingly added Paylocity to their
HCM leader quadrants and shortlist rankings.
We also continued investing in our go-to-market efforts,
adding new sales reps and scaling our referral channel,
lead generation, brand, and event initiatives. We grew
our client base by approximately 8% in fiscal 2024,
closing the year with 39,050 clients, with significant
growth opportunities on the horizon. In the past year and
$1.4B
19%
Total revenue
YoY growth
Adjusted EBITDA
Adjusted EBITDA Margin
$505.6M
Adjusted EBITDA
excluding interest income
on funds held for clients
36%
410bps YoY leverage
Margin of
30%
$384.7M
280bps YoY leverage
Free cash flow
Free cash flow margin
$305.9M
22%
340bps YoY leverage
Paylocity recognized by Gartner
Peer Insights Voice of the
Customer for Cloud HCM Suites
for 1,000+ Employee Enterprises
*Refer to Financial Highlights and Appendix A for additional details on non-GAAP financial measures.

throughout our history, we   ve remained focused on delivering
world-class service. This combination of strong operational
execution and industry-leading products allowed us to, once
again, achieve more than 92% revenue retention in fiscal 2024.
Our success would not be possible without the dedication of our
more than 6,400 employees, who work closely with our clients
every day. We cultivate an active, engaged culture through our
Corporate Social Responsibility efforts, which center around the
three pillars of our mission: supporting our people, uplifting our
communities, and sustainability.
39K+
Clients
92%+
Revenue
Retention
6M+
Employees on
Platform
6,400+
Employees
Headquarters
Schaumburg, IL
A key component of our thriving culture is our commitment to diversity, equity, inclusion, and accessibility
(DEIA). In fiscal 2024, we expanded membership on our Diversity Leadership Council while our Employee
Resource Groups led numerous education programs and volunteer opportunities. Our ongoing endeavors
to foster an inclusive workplace have been recognized by Forbes, Newsweek, and Built-In, among others,
and we were again certified as a Great Place to Work for 2024.
Equally important to our Corporate Responsibility is our regard for
protecting our clients    data through stringent governance programs.
The ethical use of this data guides all our business practices. You can
read more about our CSR efforts in our report or on the Corporate
Responsibility section of our website.
As we carry this momentum into fiscal 2025, we extend our gratitude
to our employees, clients, and partners for their invaluable contributions
to a successful fiscal 2024.
Toby Williams
President and Chief Executive Officer

Annual Report 2024 | Innovation & Product
Innovation
Delivering Experiences Employees Crave
with Automation and Insights HR Needs
While traditional HR and payroll providers focus on automating basic HR processes such as payroll and
benefits administration, Paylocity combines these capabilities with the tools that HR and businesses need
to compete for talent and deliver against the expectations of the modern workforce.
Single Platform with Flexible Data
The foundation of our platform is a single employee system
of record and end-to-end capabilities to support the
employee lifecycle, ensuring efficiency and compliance:
Recruiting & Onboarding, Payroll, Time & Labor, HR, Benefits,
Learning, and Performance & Compensation. We also make
it easy to connect Paylocity with other business systems
through hundreds of integrations with benefits, 401(k), and
other providers and open APIs.
Employee Experience
The modern workforce wants to feel heard and valued,
foster connection across their organization, and prioritize
flexibility and well-being. Paylocity offers employee-focused
features like native video, social collaboration, recognition
and rewards, chat, and more that enable employers to
deliver against these expectations     even those who are
remote, on-the-go, or don   t have corporate email addresses.
Insights, Recommendations, and AI
Access to employee data and reporting for compliance
meets the basic needs of most companies, but we take it
a step further by providing actionable insights powered
by AI based on best practices across our 39,050 clients.
With interactive dashboards to interpret data, clients
get prescriptive recommendations tailored to improving
efficiency and building a healthier workforce, and use
AI-assisted tools to automate day-to-day tasks.
Unmatched Customer Service
We move Forward Together with clients by building deep,
long-lasting partnerships. From initial implementation to
ongoing service, we have a track record of going beyond
the transactional to move clients toward their strategic goals.
We also consider clients our    co-creators,    regularly soliciting
and prioritizing their feedback in our product roadmap.

Product
The Most Complete Platform
for the Modern Workforce
Payroll


SaaS-based payroll
Global payroll
Tax filing, direct deposit
On Demand Payment
Employee Experience


Community
Video
Recognition & Rewards
Employee Voice
Human Resources
    Single platform for HR & payroll
    Employee Self-Service
    Compliance & record keeping
    Workflows & Documents
Time & Labor
    Time & Attendance
    Scheduling
    Time Collection
Talent



Recruiting
Onboarding
Performance
Compensation
Learning
Benefits
    Benefit enrollment & updates
    Advanced reporting
    TPA solutions



shareholder letter icon 10/24/2024 Letter Continued (Full PDF)
 

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