Paylocity Holding Corporation reported financial results for its second quarter of fiscal 2026, which ended December 31, 2025.

Paylocity Holding Corporation (Nasdaq: PCTY), a leading provider of cloud-based HR, Finance, and IT solutions, today announced financial results for the second quarter of fiscal year 2026, which ended December 31, 2025.

"The momentum seen in Q1 continued into the second quarter and contributed to a strong selling season performance and increased revenue and profitability guidance for fiscal 26. Our results continue to be driven by the combination of strong sales, operational execution, and product differentiation – including the addition of new platform capabilities like Benefits Guided Setup to support our clients and broker partners through open enrollment season. Additionally, as highlighted last quarter, we continue to invest in AI and broader automation efforts internally to drive greater efficiency and productivity across our business, as evidenced by our increasing free cash flow and adjusted EBITDA margins. I would also like to thank all of our Paylocity teams as they support our clients through our busiest time of year," said Toby Williams, President and Chief Executive Officer of Paylocity.

Second Quarter Fiscal 2026 Financial Highlights

Revenue:

Recurring & other revenue was $387.0 million, an increase of 11.3% from the second quarter of fiscal year 2025.

Total revenue was $416.1 million, an increase of 10.4% from the second quarter of fiscal year 2025.

Operating Income:

GAAP operating income was $70.4 million and non-GAAP operating income was $119.1 million in the second quarter of fiscal year 2026 compared to GAAP operating income of $46.6 million and non-GAAP operating income of $101.1 million in the second quarter of fiscal year 2025.

Net Income:

GAAP net income was $50.2 million or $0.92 per share in the second quarter of fiscal year 2026 based on 54.8 million diluted weighted average common shares outstanding compared to $37.5 million or $0.66 per share in the second quarter of fiscal year 2025 based on 56.7 million diluted weighted average common shares outstanding.

Adjusted EBITDA:

Adjusted EBITDA, a non-GAAP measure, was $142.7 million in the second quarter of fiscal year 2026 compared to $126.2 million in the second quarter of fiscal year 2025.

Adjusted EBITDA excluding interest income on funds held for clients, a non-GAAP measure, was $113.6 million in the second quarter of fiscal year 2026 as compared to $96.9 million in the second quarter of fiscal year 2025.

Balance Sheet and Cash Flow:

Cash and cash equivalents totaled $162.5 million as of December 31, 2025.

Long-term debt totaled $81.3 million as of December 31, 2025, representing borrowings under our credit facility to fund the acquisition of Airbase Inc. on October 1, 2024. This reflects approximately $81.3 million repaid on our outstanding balance during the first six months of fiscal year 2026.

Net cash provided by operating activities for the first six months of fiscal year 2026 was $203.5 million compared to $145.7 million for the first six months of fiscal year 2025. Net cash from operating activities for the trailing twelve months ended December 31, 2025 was $476.0 million or 28.3% of total revenue as compared to $393.1 million or 26.2% of total revenue for the trailing twelve months ended December 31, 2024.

Free cash flow, a non-GAAP measure, was $396.9 million or 23.6% of total revenue for the trailing twelve months ended December 31, 2025 compared to $315.1 million or 21.0% of total revenue for the trailing twelve months ended December 31, 2024.

 

A reconciliation of GAAP to non-GAAP financial measures has been provided in this press release in the accompanying tables. Additional information regarding these measures can be found below under the headings "Non-GAAP Financial Measures" and "Definitions of our Non-GAAP Measures."

Business Outlook

Based on information available as of February 5, 2026, Paylocity is issuing guidance for the third quarter and full fiscal year 2026 as indicated below.

Third Quarter 2026:

Recurring and other revenue is expected to be in the range of $457.5 million to $462.5 million, which represents approximately 9%-10% growth over fiscal year 2025 third quarter recurring and other revenue.

Total revenue is expected to be in the range of $487.0 million to $492.0 million, which represents approximately 7%-8% growth over fiscal year 2025 third quarter total revenue.

Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $200.0 million to $204.0 million.

Adjusted EBITDA excluding interest income on funds held for clients, a non-GAAP measure, is expected to be in the range of $170.5 million to $174.5 million.

Fiscal Year 2026:

Recurring and other revenue is expected to be in the range of $1.620 billion to $1.630 billion, which represents approximately 10%-11% growth over fiscal year 2025 recurring and other revenue.

Total revenue is expected to be in the range of $1.732 billion to $1.742 billion, which represents approximately 9% growth over fiscal year 2025 total revenue.

Adjusted EBITDA, a non-GAAP measure, is expected to be in the range of $622.5 million to $630.5 million.

Adjusted EBITDA excluding interest income on funds held for clients, a non-GAAP measure, is expected to be in the range of $510.5 million to $518.5 million.

 

We are unable to reconcile the forward-looking non-GAAP measures set forth above to their directly comparable GAAP financial measures because the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort.

Conference Call Details

Paylocity will host a conference call to discuss its second quarter fiscal year 2026 results at 4:00 p.m. Central Time today (5:00 p.m. Eastern Time). 

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