On this page of StockholderLetter.com we present the 10/20/2023 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.
2023 Annual Report
Message from our Co-Chief Executive Officers Fiscal 2023 was a tremendous year for Paylocity total revenue was $1.17B, representing 38% year-over-year growth as our focus on providing the most complete platform for the modern workforce continues to resonate with our clients and prospects. Beyond driving strong revenue growth, we are also pleased with our increased pro tability in scal 2023, with adjusted EBITDA of $375.2M or 31.9% margin and free cash ow $215.8M or 18.4% margin.* For our clients, Paylocity s commitment to innovation means we re aligned not only with their current needs, but also their future requirements. We ve continued to enhance products like Community, Surveys, Video, and Learning, as well as our Mobile App, to ensure our clients can meet the needs of their employees. These products have seen increasing attach and utilization rates, while use of data and analytics on our platform grew exponentially in scal 2023 especially our Modern Workforce Index, which analyzes, scores, and tracks a company s progress in delivering a more engaging experience to their employees. Total revenue YoY growth Adjusted EBITDA of In early April, we launched the HR industry s rst integration of generative AI into Community, our social collaboration hub. We continue to embed generative AI across the platform to streamline processes and better engage employees. We also launched Market Pay, which delivers comprehensive pay data to help organizations pay their employees fairly, attract and retain top talent, and maintain compliance. New advanced scheduling functionality improves workforce management by providing more schedule exibility for employees and access to real-time insights for managers to reduce labor costs and minimize risks. Adjusted EBITDA Margin 400bps YoY leverage Our product development investments continue to be recognized by third parties. NelsonHall, a leading industry analyst rm, ranked Paylocity a Leader in its Next-Generation HCM Technology NEAT report for the mid-market and enterprise segments. G2 Crowd, an independent product review site, named us an overall leader for all 12 HRIS product categories for the 19th straight quarter and the #1 HR software solution. We also continue to add new sales reps, while also investing in our referral channel and lead generation to support our go-to-market efforts. We grew our client base by approximately 9% and total employees on the platform by mid teens in scal 2023, closing the year with 36,200 clients. We believe there are signi cant growth opportunities for Paylocity, as we target organizations from 10 5,000 employees. 1 Paylocity 2023 Annual Report *Refer to Financial Highlights and Appendix A for additional details on non-GAAP nancial measures.
From an operational perspective, we remain focused on delivering world-class service to our clients, and we re proud of the efforts of our operations teams to create a true partnership with each of them. This combination of strong operational execution and industry-leading products allowed us to, once again, achieve over 92% revenue retention in scal 2023. Clients 9% Revenue retention Employees Headquarters Schaumburg, IL The success we ve had as a company would not be possible without the dedication and commitment of our more than 6,000 employees, who work closely with our clients every day. Our strong culture and commitment to our workforce has garnered signi cant recognition, including Forbes Best Employers for Diversity and Best Employers for Women, Built In s Best Places to Work 2023, Great Places to Work Certi ed 2023, and the 2023 Best and Brightest Companies to Work for in the Nation. Another vital component of our culture is our commitment to being a leader in corporate social responsibility (CSR). We have effective programs in place across our business, which we ve showcased on the Corporate Responsibility section of our website and in our annual CSR report. As we carry this momentum into scal 2024, we also need to thank our employees, clients, and partners for helping make scal 2023 such a success. We couldn t have accomplished what we did this past year without your contributions. Steve Beauchamp & Toby Williams Co-Chief Executive Officers Client growth
The Most Complete Platform for the Modern Workforce Payroll SaaS-based payroll Human Resources Recruiting Global payroll Single platform for HR & payroll Tax ling, direct deposit Employee Self-Service Performance On Demand Payment HR compliance & record keeping Compensation Work ows & Documents Employee Experience Onboarding Learning Time & Labor Bene ts Community Time & Attendance Video Scheduling Bene t enrollment & updates Recognition & Rewards Time Collection Advanced reporting Surveys 3 Talent Paylocity 2023 Annual Report TPA solutions
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 bene ts administration, Paylocity combines these capabilities with the tools that HR & 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: Recruiting & Onboarding, Payroll, Time & Labor, HR, Bene ts, Learning, and Performance & Compensation. We provide all of this in a single platform so data ows seamlessly to ensure efficiency and compliance. We also make it easy to connect Paylocity with other business systems through hundreds of integrations with bene ts, 401(k), and other providers and open APIs. Employee Experience Traditional HR systems are designed to automate processes for HR, but the modern workforce wants more they want to feel heard and valued, foster connection across their organization, and prioritize exibility and wellbeing. Paylocity offers employee-focused features like native video, social collaboration, recognition & rewards, chat, and more that enable employers to deliver against these expectations even those that are remote, on-the-go, or don t have corporate email addresses. Embedding employee experiences across our HCM platform bene ts HR too gaining efficiencies from employees adopting self-service processes and improving their ability to reach and communicate with employees. Insights, Recommendations & 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 36,200 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 From initial implementation to ongoing service, we prioritize building a true partnership with our clients. We consider clients our co-creators, regularly soliciting and prioritizing their feedback in our product roadmap. Paylocity 2023 Annual Report 4
 • shareholder letter icon 10/20/2023 Letter Continued (Full PDF)
 • stockholder letter icon 10/24/2024 PCTY Stockholder Letter
 • stockholder letter icon 10/23/2025 PCTY Stockholder Letter
 • stockholder letter icon More "Application Software" Category Stockholder Letters
 • Benford's Law Stocks icon PCTY Benford's Law Stock Score = 94


PCTY 10/20/2023 Shareholder/Stockholder Letter Transcript:

2023
Annual
Report

Message from our
Co-Chief Executive Officers
Fiscal 2023 was a tremendous year for Paylocity   total revenue was $1.17B, representing 38% year-over-year
growth   as our focus on providing the most complete platform for the modern workforce continues to resonate
with our clients and prospects. Beyond driving strong revenue growth, we are also pleased with our increased
pro   tability in    scal 2023, with adjusted EBITDA of $375.2M or 31.9% margin and free cash    ow $215.8M or
18.4% margin.*
For our clients, Paylocity   s commitment to innovation
means we   re aligned not only with their current needs,
but also their future requirements. We   ve continued
to enhance products like Community, Surveys, Video,
and Learning, as well as our Mobile App, to ensure
our clients can meet the needs of their employees.
These products have seen increasing attach and
utilization rates, while use of data and analytics on our
platform grew exponentially in    scal 2023   especially
our Modern Workforce Index, which analyzes, scores,
and tracks a company   s progress in delivering a more
engaging experience to their employees.
Total revenue
YoY growth
Adjusted EBITDA of
In early April, we launched the HR industry   s    rst
integration of generative AI into Community, our social
collaboration hub. We continue to embed generative
AI across the platform to streamline processes and
better engage employees. We also launched Market
Pay, which delivers comprehensive pay data to help
organizations pay their employees fairly, attract and
retain top talent, and maintain compliance. New
advanced scheduling functionality improves workforce
management by providing more schedule    exibility
for employees and access to real-time insights for
managers to reduce labor costs and minimize risks.
Adjusted EBITDA Margin
400bps YoY leverage
Our product development investments continue to be recognized by third parties. NelsonHall, a leading
industry analyst    rm, ranked Paylocity a Leader in its Next-Generation HCM Technology NEAT report for the
mid-market and enterprise segments. G2 Crowd, an independent product review site, named us an overall
leader for all 12 HRIS product categories for the 19th straight quarter
and the #1 HR software solution.
We also continue to add new sales reps, while also investing in our
referral channel and lead generation to support our go-to-market
efforts. We grew our client base by approximately 9% and total
employees on the platform by mid teens in    scal 2023, closing the
year with 36,200 clients. We believe there are signi   cant growth
opportunities for Paylocity, as we target organizations from
10   5,000 employees.
1
Paylocity 2023 Annual Report
*Refer to Financial Highlights and Appendix A for additional details
on non-GAAP    nancial measures.

From an operational perspective, we remain focused on
delivering world-class service to our clients, and we   re
proud of the efforts of our operations teams to create
a true partnership with each of them. This combination
of strong operational execution and industry-leading
products allowed us to, once again, achieve over 92%
revenue retention in    scal 2023.
Clients
9%
Revenue
retention
Employees
Headquarters
Schaumburg, IL
The success we   ve had as a company would not be possible without the dedication
and commitment of our more than 6,000 employees, who work closely with our clients
every day. Our strong culture and commitment to our workforce has
garnered signi   cant recognition, including Forbes    Best Employers
for Diversity and Best Employers for Women, Built In   s Best Places
to Work 2023, Great Places to Work Certi   ed 2023, and the 2023
Best and Brightest Companies to Work for in the Nation.
Another vital component of our culture is our commitment to
being a leader in corporate social responsibility (CSR). We
have effective programs in place across our business, which
we   ve showcased on the Corporate Responsibility section of
our website and in our annual CSR report.
As we carry this momentum into    scal 2024, we also need to
thank our employees, clients, and partners for helping make
   scal 2023 such a success. We couldn   t have accomplished
what we did this past year without your contributions.
Steve Beauchamp & Toby Williams
Co-Chief Executive Officers
Client growth

The Most Complete Platform
for the Modern Workforce
Payroll
    SaaS-based payroll
Human Resources
    Recruiting
    Global payroll
    Single platform for
HR & payroll
    Tax    ling, direct deposit
    Employee Self-Service
    Performance
    On Demand Payment
    HR compliance
& record keeping
    Compensation
    Work   ows & Documents
Employee Experience
    Onboarding
    Learning
Time & Labor
Bene   ts
    Community
    Time & Attendance
    Video
    Scheduling
    Bene   t enrollment
& updates
    Recognition & Rewards
    Time Collection
    Advanced reporting
    Surveys
3
Talent
Paylocity 2023 Annual Report
    TPA solutions

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 bene   ts
administration, Paylocity combines these capabilities with the
tools that HR & 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: Recruiting & Onboarding, Payroll, Time & Labor, HR,
Bene   ts, Learning, and Performance & Compensation. We
provide all of this in a single platform so data    ows seamlessly
to ensure efficiency and compliance. We also make it easy
to connect Paylocity with other business systems through
hundreds of integrations with bene   ts, 401(k), and other
providers and open APIs.
Employee Experience
Traditional HR systems are designed to automate processes
for HR, but the modern workforce wants more   they want
to feel heard and valued, foster connection across their
organization, and prioritize    exibility and wellbeing. Paylocity
offers employee-focused features like native video, social
collaboration, recognition & rewards, chat, and more that
enable employers to deliver against these expectations   even
those that are remote, on-the-go, or don   t have corporate
email addresses. Embedding employee experiences across
our HCM platform bene   ts HR too   gaining efficiencies from
employees adopting self-service processes and improving their
ability to reach and communicate with employees.
Insights, Recommendations & 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 36,200 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
From initial implementation to ongoing service, we
prioritize building a true partnership with our clients.
We consider clients our    co-creators,    regularly
soliciting and prioritizing their feedback in our
product roadmap.
Paylocity 2023 Annual Report
4


shareholder letter icon 10/20/2023 Letter Continued (Full PDF)
 

PCTY Stockholder/Shareholder Letter (Paylocity Holding Corp) 10/20/2023 | www.StockholderLetter.com
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