• Q4 2015 Total Revenue of $40.0 million, up 40% year-over-year
  • FY 2015 Total Revenue of $152.7 million, up 40% year-over-year

 

ARLINGTON HEIGHTS, Ill., Aug. 13, 2015 (GLOBE NEWSWIRE) — Paylocity Holding Corporation (Nasdaq:PCTY), a cloud-based provider of payroll and human capital management software solutions, today announced financial results for the fourth quarter and full fiscal year 2015, which ended June 30, 2015.

 

“Paylocity ended a strong fiscal year with an excellent fourth quarter highlighted by total revenue growth of 40% and recurring revenue growth of 41%, driven by strong sales and operational execution,” said Steve Beauchamp, President and Chief Executive Officer of Paylocity. “We continue to realize the benefits of R&D investment in our leading HCM platform, recently announcing the release of ACA Enhanced, a new compliance solution to help clients manage the reporting requirements of the Affordable Care Act.”

 

Fourth Quarter 2015 Financial Highlights

 

Revenue:

  • Total revenue was $40.0million, an increase of 40% from the fourth quarter of fiscal year 2014.
  • Total recurring revenue was $38.2million, representing 95% of total revenue and an increase of 41% from the fourth quarter of fiscal year 2014.

Adjusted EBITDA:

  • Adjusted EBITDA, a non-GAAP measure, was $0.6 million compared to Adjusted EBITDA of ($0.3) million in the fourth quarter of fiscal year 2014.

Operating Loss:

  • GAAP operating loss was ($4.3) million, compared to an operating loss of ($6.3) million in the fourth quarter of fiscal year 2014.
  • Non-GAAP operating loss was ($1.7) million, compared to non-GAAP operating loss of ($2.1) million in the fourth quarter of fiscal year 2014.

Net Loss:

  • GAAP net loss was ($4.4) million. This compares to a net loss of ($6.7) million for the fourth quarter of fiscal year 2014. Net loss per share was ($0.09) for the three months ended June 30, 2015 based on 50.7 million basic and diluted weighted average common shares outstanding. Net loss per share was ($0.14) for the fourth quarter of fiscal year 2014, based on 49.6 million basic and diluted weighted average common shares outstanding.
  • Non-GAAP net loss was ($1.5) million. This compares to non-GAAP net loss of ($2.4) million for the fourth quarter of fiscal year 2014. Non-GAAP net loss per share was ($0.03) for the three months ended June 30, 2015, based on 50.7 million basic and diluted weighted average common shares outstanding. Non-GAAP net loss per share was ($0.05) for the fourth quarter of fiscal year 2014, based on 49.6 million basic and diluted weighted average common shares outstanding.

 

Fiscal Year 2015 Financial Highlights

 

Revenue:

  • Total revenue was $152.7million, an increase of 40% from fiscal year 2014.
  • Total recurring revenue was $144.1million, representing 94% of total revenue and an increase of 41% from fiscal year 2014.

Adjusted EBITDA:

  • Adjusted EBITDA, a non-GAAP measure, was $8.2million for fiscal year 2015 compared to Adjusted EBITDA of $5.4 million for fiscal year 2014.

Operating Loss:

  • GAAP operating loss was ($13.9) million, compared to operating loss of ($7.0) million in fiscal year 2014.
  • Non-GAAP operating loss was ($0.4) million, compared to non-GAAP operating loss of ($1.1) million in fiscal year 2014.

Net Income (Loss):

  • GAAP net loss was ($14.0) million. This compares to net loss of ($7.1) million for fiscal year 2014. Net loss per share was ($0.28) for fiscal year 2015, based on 50.1 million basic weighted average common shares outstanding. On a pro forma basis, assuming the conversion of all outstanding preferred shares as of July 1, 2013, net loss per share would have been ($0.16) for fiscal year 2014, based on 45.4 million basic and diluted weighted average common shares outstanding.
  • Non-GAAP net income was $0.4 million. This compares to non-GAAP net loss of ($1.1) million in fiscal year 2014. Non-GAAP net income per share was $0.01 for fiscal year 2015 based on 50.1 million basic weighted average common shares outstanding. On a pro forma basis, assuming conversion of all outstanding preferred shares as of July 1, 2013, non-GAAP net loss per share was ($0.02) for fiscal year 2014, based on 45.4 million basic weighted average common shares outstanding.

Balance Sheet and Cash Flow:

  • Cash and cash equivalents totaled $81.3 million at the end of the year.
  • Cash flow from operations for fiscal year 2015 was $11.1 million compared to $7.2 million for fiscal year 2014.

A reconciliation of GAAP to non-GAAP financial measures has been provided in this press release, including the accompanying tables. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

 

Business Outlook

Based on information available as of August 13, 2015, Paylocity is issuing guidance for the first quarter and full fiscal year 2016 as indicated below.

First Quarter 2016:

  • Total revenue is expected to be in the range of $41.0 million to $42.0 million.
  • Adjusted EBITDA is expected to be a loss in the range of ($2.0) million to ($1.0) million.
  • Non-GAAP net loss is expected to be in the range of ($4.5) million to ($3.5) million, or ($0.09) to ($0.07) per share, based on 50.8 million basic and diluted weighted average common shares outstanding.

Fiscal Year 2016:

  • Total revenue is expected to be in the range of $199.0 million to $203.0 million.
  • Adjusted EBITDA is expected to be in the range of $10.5 million to $12.5 million.
  • Non-GAAP net loss is expected to be in the range of ($4.2) million to ($2.2) million, or ($0.08) to ($0.04) per share, based on 51.0 million basic and diluted weighted average common shares outstanding.

 

Conference Call Details

Paylocity will host a conference call to discuss its fourth quarter and fiscal year 2015 results at 4:00 p.m. Central Time today (5:00 Eastern Time). A live audio webcast of the conference call, together with detailed financial information, can be accessed through the company’s Investor Relations Web site at http://www.paylocity.com. Participants who choose to call in to the conference call can do so by dialing (855) 226-3021 or (315) 625-6892, passcode 82933282. A replay of the call will be available and archived via webcast at www.paylocity.com.

 

About Paylocity

Paylocity is a provider of cloud-based payroll and human capital management, or HCM, software solutions for medium-sized organizations. Paylocity’s comprehensive and easy-to-use solutions enable its clients to manage their workforces more effectively. Paylocity’s solutions help drive strategic human capital decision-making and improve employee engagement by enhancing the human resource, payroll and finance capabilities of its clients. For more information, visit www.paylocity.com.

 

Non-GAAP Financial Measures

The company uses certain non-GAAP financial measures in this release, including Adjusted EBITDA, adjusted gross profit, adjusted recurring gross profit, non-GAAP operating income (loss), non-GAAP net income (loss), non-GAAP net income (loss) per share, non-GAAP sales and marketing, non-GAAP total research and development and non-GAAP general and administrative. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. We define Adjusted EBITDA as net income (loss) before interest expense, taxes, and depreciation and amortization expense, adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and a one-time founder funded bonus pay-out. Adjusted gross profit and adjusted recurring gross profit are adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, a one-time founder funded bonus pay-out and amortization of capitalized internal-use software costs. Non-GAAP operating income (loss) and non-GAAP sales and marketing expense are adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and a one-time founder funded bonus pay-out. Non-GAAP general and administrative expenses are adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, a one-time founder funded bonus pay-out and the amortization of acquired intangibles. Non-GAAP net income (loss) and non-GAAP net income (loss) per share are adjusted to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, a one-time founder funded bonus pay-out and the amortization of acquired intangibles. Non-GAAP total research and development is adjusted for capitalized internal-use software costs, to eliminate stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and a one-time founder-funded bonus payout. Please note that other companies may define their non-GAAP financial measures differently than we do. Management presents certain non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance. Management uses these non-GAAP financial measures for planning purposes, including analysis of the company’s performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company’s financial and operational performance. Management also intends to provide these non-GAAP financial measures as part of the company’s future earnings discussions and, therefore, the inclusion of the non-GAAP financial measures should provide consistency in the company’s financial reporting. Non-GAAP financial measures have limitations as an analytical tool. Investors are encouraged to review the reconciliation of the non-GAAP measures to their most directly comparable GAAP measures provided in this release.

 

Safe Harbor/forward looking statements

This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included herein regarding Paylocity’s future operations, future financial position and performance, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “would,” “seek” and similar expressions (or the negative of these terms) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about management’s estimates regarding future revenues and financial performance and other statements about management’s beliefs, intentions or goals. Paylocity may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on Paylocity’s forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements, including, but not limited to, risks related to Paylocity’s ability to retain existing clients and to attract new clients to enter into subscriptions for its services; Paylocity’s ability to sell new products, such as ACA Enhanced, to its existing customers and new customers; Paylocity’s ability to service clients effectively; Paylocity’s ability to expand its sales organization to effectively address new geographies; Paylocity’s ability to continue to expand its referral network of third parties; Paylocity’s ability to accurately forecast revenue and appropriately plan its expenses; Paylocity’s ability to manage its growth effectively; Paylocity’s ability to forecast its tax position, including but not limited to the assessment of the need for a valuation allowance against its deferred tax position; continued acceptance of SaaS as an effective method for delivery of payroll and HCM solutions; Paylocity’s ability to protect and defend its intellectual property; unexpected events in the market for Paylocity’s solutions; future regulatory, judicial and legislative changes in its industry; changes in the competitive environment in Paylocity’s industry and the market in which it operates; adverse changes in general economic or market conditions; changes in the employment rates ofPaylocity’s clients and the resultant impact on revenue; and other risks and potential factors that could affect Paylocity’s business and financial results identified in Paylocity’s filings with the Securities and Exchange Commission (the “SEC”), including its 10-K filed with the SEC on August 22, 2014. Additional information will also be set forth in Paylocity’s future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that Paylocity makes with the SEC. These forward-looking statements represent Paylocity’s expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Paylocity disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.

 

PAYLOCITY HOLDING CORPORATION
Consolidated Balance Sheets
(in thousands, except per share data)
As of June 30,
Assets 2014 2015
Current assets:
Cash and cash equivalents $78,848 $81,258
Accounts receivable, net 756 1,115
Prepaid expenses and other 2,694 4,416
Deferred income tax assets, net 706 775
Total current assets before funds held for clients 83,004 87,564
Funds held for clients 417,261 591,219
Total current assets 500,265 678,783
Long-term prepaid expenses 313 403
Capitalized internal-use software, net 5,093 7,357
Property and equipment, net 13,125 16,061
Intangible assets, net 6,320 11,941
Goodwill 3,035 6,003
Total assets $528,151 $720,548
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable $2,133 $1,327
Taxes payable 5
Consideration related to acquisitions 2,985 511
Accrued expenses 10,744 16,430
Total current liabilities before client fund obligations 15,867 18,268
Client fund obligations 417,261 591,219
Total current liabilities 433,128 609,487
Deferred rent 3,175 2,607
Deferred income tax liabilities, net 714 874
Total liabilities $437,017 $612,968
Stockholders’ equity (deficit)
Preferred stock, $0.001 par value, 5,000 authorized, no shares issued and outstanding at June 30, 2014 and 2015 $— $—
Common stock, $0.001 par value, 155,000 shares authorized at June 30, 2014 and 2015, 49,564 and 50,703 shares issued and outstanding at June 30, 2014 and 2015, respectively 50 51
Additional paid-in capital 125,255 155,672
Accumulated deficit (34,171) (48,143)
Total stockholders’ equity (deficit) $91,134 $107,580
Total liabilities and stockholders’ equity (deficit) $528,151 $720,548
PAYLOCITY HOLDING CORPORATION
Consolidated Statements of Operations
(in thousands, except per share data)
For the Three
Months Ended For the Years Ended
June 30, June 30,
2014 2015 2014 2015
Revenues:
Recurring fees $26,760 $37,636 $100,362 $142,168
Interest income on funds held for clients 360 547 1,582 1,901
Total recurring revenues 27,120 38,183 101,944 144,069
Implementation services and other 1,527 1,821 6,743 8,629
Total revenues 28,647 40,004 108,687 152,698
Cost of revenues:
Recurring revenues 9,999 11,750 37,319 46,366
Implementation services and other 5,105 6,366 17,775 24,530
Total cost of revenues 15,104 18,116 55,094 70,896
Gross profit 13,543 21,888 53,593 81,802
Operating expenses:
Sales and marketing 8,986 11,883 28,276 43,035
Research and development 3,609 5,513 10,355 19,864
General and administrative 7,254 8,756 21,980 32,824
Total operating expenses 19,849 26,152 60,611 95,723
Operating income (loss) (6,306) (4,264) (7,018) (13,921)
Other income (expense) 54 (126) 163 54
Income (loss) before income taxes (6,252) (4,390) (6,855) (13,867)
Income tax expense 452 39 255 105
Net income (loss)  $ (6,704)  $ (4,429)  $ (7,110)  $(13,972)
Net income (loss) attributable to common stockholders  $ (6,704)  $ (4,429)  $ (9,392)  $(13,972)
Net income (loss) per share attributable to common stockholders:
Basic  $ (0.14)  $ (0.09)  $ (0.26)  $ (0.28)
Diluted  $ (0.14)  $ (0.09)  $ (0.26)  $ (0.28)
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders:
Basic 49,564 50,650 36,707 50,127
Diluted 49,564 50,650 36,707 50,127

Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and a one-time founder funded bonus pay-out in the year ended June 30, 2014 are included in the above line items:

For the Three
Months Ended For the Years Ended
June 30,  June 30,
2014 2015 2014 2015
Cost of revenue – recurring $524 $311 $638 $1,567
Cost of revenue – implementation services and other 506 212 603 1,251
Sales and marketing 755 631 930 3,347
Research and development 831 468 970 2,609
General and administrative 1,570 991 2,759 4,722
Total $4,186 $2,613 $5,900 $13,496
PAYLOCITY HOLDING CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
For the Years Ended June 30,
2013 2014 2015
Cash flows provided by operating activities:
Net income (loss) $617  $ (7,110)  $ (13,972)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation 523 4,929 13,169
Depreciation and amortization 5,571 6,336 8,609
Deferred income tax (benefit) expense (822) 341 91
Provision for doubtful accounts 60 62 90
Loss on disposal of equipment 98 256
Changes in operating assets and liabilities:
Accounts receivable (295) (78) (449)
Prepaid expenses (1,061) (1,132) (1,754)
Trade accounts payable 138 465 (186)
Accrued expenses 1,497 3,288 5,251
Net cash provided by operating activities 6,228 7,199 11,105
Cash flows from investing activities:
Capitalized internal-use software costs (1,967) (4,349) (4,215)
Purchases of property and equipment (3,987) (6,667) (9,020)
Payments for acquisition (6,450) (11,979)
Net change in funds held for clients (92,650) (61,356) (173,958)
Net cash used in investing activities (98,604) (78,822) (199,172)
Cash flows from financing activities:
Net change in client funds obligations 92,650 61,356 173,958
Principal payments on long-term debt (1,625) (1,563)
Proceeds from initial public offering, net of issuance costs 82,032
Proceeds from follow-on offering, net of issuance costs 18,367
Payments on initial public offering costs (75)
Capital contribution 1,052
Proceeds from exercise of stock options 76 247
Payments for redemption of common shares (162)
Proceeds from employee stock purchase plan 1,773
Taxes paid related to net share settlement of equity awards (3,793)
Net cash provided by financing activities 90,939 142,877 190,477
Net Change in Cash and Cash Equivalents (1,437) 71,254 2,410
Cash and Cash Equivalents—Beginning of Year 9,031 7,594 78,848
Cash and Cash Equivalents—End of Year $7,594 $78,848 $81,258
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Build-out allowance received from landlord $325 $1,162
Purchase of property and equipment, accrued but not paid $27 $896 $210
Unpaid initial offering costs $75
Supplemental disclosure of cash flow information
Cash paid for income taxes $69 $106 $162
Cash paid for interest $385 $70
Paylocity Holding Corporation
Reconciliation of GAAP to non-GAAP Financial Measures
(In thousands except per share data)
Three months
Ended
June 30,
For the year
Ended
June 30,
2014 2015 2014 2015
Reconciliation from gross profit to adjusted gross profit:
Gross profit  $ 13,543  $ 21,888  $ 53,593  $ 81,802
Amortization of capitalized internal-use software costs  385  685  2,195  2,606
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  709  523  920  2,818
One-time founder funded bonus pay-out  321  —  321  —
Adjusted gross profit  $ 14,958  $ 23,096  $ 57,029  $ 87,226
Three months
Ended
June 30,
For the year
Ended
June 30,
2014 2015 2014 2015
Reconciliation from total recurring revenues to adjusted recurring gross profit:
Total recurring revenues  $ 27,120  $ 38,183  $ 101,944  $ 144,069
Cost of recurring revenues  9,999  11,750  37,319  46,366
Recurring gross profit  17,121  26,433  64,625  97,703
Amortization of capitalized internal-use software costs  385  685  2,195  2,606
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  382  311  496  1,567
One-time founder funded bonus pay-out  142  —  142  —
Adjusted recurring gross profit  $ 18,030  $ 27,429  $ 67,458  $ 101,876
Three months
Ended
June 30,
For the year
Ended
June 30,
2014 2015 2014 2015
Reconciliation from net loss to Adjusted EBITDA:
Net loss  $ (6,704)  $ (4,429)  $ (7,110)  $ (13,972)
Interest expense  —  —  67  —
Income tax expense  452  39  255  105
Depreciation and amortization  1,792  2,364  6,336  8,609
EBITDA  (4,460)  (2,026)  (452)  (5,258)
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  3,215  2,613  4,929  13,496
One-time founder funded bonus pay-out  971  —  971  —
Adjusted EBITDA  $ (274)  $ 587  $ 5,448  $ 8,238
Three months
Ended
June 30,
For the year
Ended
June 30,
2014 2015 2014 2015
Reconciliation from operating loss to non-GAAP operating loss:
Operating loss  $ (6,306)  $ (4,264)  $ (7,018)  $ (13,921)
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  3,215  2,613  4,929  13,496
One-time founder funded bonus pay-out  971  —  971  —
Non-GAAP operating loss  $ (2,120)  $ (1,651)  $ (1,118)  $ (425)
Three months
Ended
June 30,
For the year
Ended
June 30,
2014 2015 2014 2015
Reconciliation from net loss to non-GAAP net income (loss):
Net loss  $ (6,704)  $ (4,429)  $ (7,110)  $ (13,972)
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  3,215  2,613  4,929  13,496
One-time founder funded bonus pay-out  971  —  971  —
Amortization of acquired intangibles  80  349  80  919
Non-GAAP net income (loss)  $ (2,438)  $ (1,467)  $ (1,130)  $ 443
Three months
Ended
June 30,
For the year
Ended
June 30,
2014 2015 2014 2015
Calculation of non-GAAP net income (loss) per share:
Non-GAAP net income (loss)  $ (2,438)  $ (1,467)  $ (1,130)  $ 443
Pro forma weighted average number of shares of common stock  49,564  50,650  45,436  50,127
Non-GAAP net income (loss) per share  $ (0.05)  $ (0.03)  $ (0.02)  $ 0.01
Three months
Ended
June 30,
For the year
Ended
June 30,
2014 2015 2014 2015
Reconciliation of non-GAAP Sales and Marketing:
Sales and Marketing  $ 8,986  $ 11,883  $ 28,276  $ 43,035
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  591  631  766  3,347
One-time founder funded bonus pay-out  164  —  164  —
Non-GAAP Sales and Marketing  $ 8,231  $ 11,252  $ 27,346  $ 39,688
Three months
Ended
June 30,
For the year
Ended
June 30,
2014 2015 2014 2015
Reconciliation of non-GAAP Total Research and Development:
Research and Development  $ 3,609  $ 5,513  $ 10,355  $ 19,864
Capitalized internal-use software costs  1,430  1,671  4,349  4,215
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  476  468  615  2,609
One-time founder funded bonus pay-out  355  —  355  —
Non-GAAP Total Research and Development  $ 4,208  $ 6,716  $ 13,734  $ 21,470
Three months
Ended
June 30,
For the year
Ended
June 30,
2014 2015 2014 2015
Reconciliation of non-GAAP General and Administrative:
General and Administrative  $ 7,254  $ 8,756  $ 21,980  $ 32,824
Stock-based compensation expense and employer payroll taxes related to stock releases and option exercises  1,439  991  2,628  4,722
One-time founder funded bonus pay-out  131  —  131  —
Amortization of acquired intangibles  80  349  80  919
Non-GAAP General and Administrative  $ 5,604  $ 7,416  $ 19,141  $ 27,183

 

Investor Contact:

Annemarie Pozo

investors@paylocity.com

224.318.3900

www.paylocity.com