Paylocity Holding Corporation Net Income surged on 475% and EBITDA Margin increased on 2.8 pp from 9.4% to 12.2%
08/09/2018 • About Paylocity Holding Corporation (
$PCTY) • By InTwits
Paylocity Holding Corporation reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Paylocity Holding Corporation is a fast growth stock: FY2018 revenue growth was 25.8%, 5 year revenue CAGR was 37.3% at FY2018 ROIC 9.4%
- EBITDA Margin is expanding: 12.2% in FY2018 vs. 9.4% in FY2017 vs. -0.6% in FY2014
- EBITDA Margin is quite volatile: 12.2% in FY2018, 9.4% in FY2017, 4.5% in FY2016, -3.5% in FY2015, -0.6% in FY2014
- Paylocity Holding Corporation spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 is 7.9%. Average EBITDA Margin for the same period was 6.7%. In FY2018 SBC/Revenue was even higher: 8.0%
- Paylocity Holding Corporation has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.2%. At the same time it's in pair with industry average of 13.2%
- CAPEX is quite volatile: $37m in FY2018, $35m in FY2017, $24m in FY2016, $13m in FY2015, $11m in FY2014
- The company has business model with low profitability: ROIC is 9.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Paylocity Holding Corporation's Revenue surged on 25.8%. Revenue growth showed acceleration in FY18Q4 - it increased 27.0% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.8 pp from 9.4% to 12.2% in FY2018. EBITDA Margin stuck to a growing trend at 3.9 pp per annum in the last 5 years.
Gross Margin increased slightly on 1.8 pp from 58.7% to 60.5% in FY2018. Gross Margin grew at 2.7 pp per annum in FY2014-FY2018. SG&A as a % of Revenue showed almost no change in FY2018. During the last 5 years SG&A as a % of Revenue topped in FY2015 at 49.7% and was declining since that time. Stock Based Compensation (SBC) as a % of Revenue decreased slightly on 0.87 pp from 8.9% to 8.0% in FY2018.
Net Income margin increased on 8.0 pp from 2.2% to 10.2% in FY2018. Net Income margin followed a growing trend at 4.5 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
Paylocity Holding Corporation's CAPEX/Revenue was 9.9% in FY2018. Paylocity Holding Corporation showed small growth in CAPEX/Revenue of 1.2 pp from 8.7% in FY2015 to 9.9% in FY2018. Average CAPEX/Revenue for the last three years was 10.7%. To deliver its fast growth Paylocity Holding Corporation invested a large share of EBITDA (80.9%) to CAPEX.
Accounts receivable as a % of Revenue showed almost no change in FY2018. Accounts payable as a % of Revenue showed almost no change in FY2018.
Paylocity Holding Corporation has spent
$20m on M&A in FY2018 which accounts for 5.3% of revenue.
Return on investment
The company operates at good ROE (21.4%) while ROIC is low (9.4%). ROIC increased on 3.8 pp from 5.6% to 9.4% in FY2018. ROE jumped on 16.4 pp from 5.0% to 21.4% in FY2018. ROIC stuck to a growing trend at 6.7 pp per annum in FY2014-FY2018.
Leverage (Debt)
The company has no debt. Cash jumped on 32.6%.
Valuation and dividends
Paylocity Holding Corporation's trades at EV/EBITDA 73.7x and P/E 91.7x.
Management team
CEO total compensation was
$6,290,454 in FY2018 which included
$516,667 salary and
$708,750 annual bonus. Toby J Williams is a Paylocity Holding Corporation's CFO. Toby J Williams has spent 1 year at the company.
Insider ownership is 33.7%. Insider ownership didn't change in 2018.
At the end of financial year the company had 2,600 employees. The number of employees surged on 22.9%. Average revenue per employee in FY2018 was
$145,203 and it increased on 2.4%.
Financial and operational results
FY ended 06/30/2018
Paylocity Holding Corporation ($PCTY) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 108.7 | 152.7 | 230.7 | 300.0 | 377.5 | 25.8% |
| Gross Profit | 53.6 | 81.8 | 132.6 | 176.0 | 228.3 | 29.7% |
| SG&A | 50.3 | 75.9 | 109.4 | 139.6 | 174.7 | 25.1% |
| EBITDA | -0.7 | -5.3 | 10.3 | 28.3 | 46.2 | 62.9% |
| EBIT | -7.0 | -13.9 | -3.6 | 7.3 | 15.9 | 118.6% |
| Interest expence | 0.1 | | | | | |
| Tax | 0.3 | 0.1 | 0.2 | 0.7 | -21.8 | -3,455.9% |
| Net Income | -7.1 | -14.0 | -3.9 | 6.7 | 38.6 | 474.5% |
| Stock Based Compensation | 4.9 | 13.2 | 17.6 | 26.7 | 30.4 | 13.5% |
Balance Sheet
|
|---|
| Cash | 78.8 | 81.3 | 86.5 | 103.5 | 137.2 | 32.6% |
| Accounts Receivable | 0.8 | 1.1 | 1.7 | 2.0 | 3.5 | 69.3% |
| Accounts Payable | 2.1 | 1.3 | 1.6 | 2.0 | 3.0 | 46.1% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 11.0 | 13.2 | 24.5 | 35.0 | 37.3 | 6.7% |
| Acquisitions | 6.5 | 12.0 | 0.5 | | 20.1 | |
Ratios
|
|---|
| Revenue growth | 40.6% | 40.5% | 51.1% | 30.0% | 25.8% | |
| EBITDA growth | -112.2% | 678.9% | -294.3% | 174.4% | 62.9% | |
|
|---|
| Gross Margin | 49.3% | 53.6% | 57.5% | 58.7% | 60.5% | 1.8% |
| EBITDA Margin | -0.6% | -3.5% | 4.5% | 9.4% | 12.2% | 2.8% |
| EBIT Margin | -6.5% | -9.1% | -1.5% | 2.4% | 4.2% | 1.8% |
| SG&A, % of revenue | 46.2% | 49.7% | 47.4% | 46.5% | 46.3% | -0.3% |
| SBC, % of revenue | 4.5% | 8.6% | 7.6% | 8.9% | 8.0% | -0.9% |
| Net Income Margin | -6.5% | -9.2% | -1.7% | 2.2% | 10.2% | 8.0% |
| CAPEX, % of revenue | 10.1% | 8.7% | 10.6% | 11.7% | 9.9% | -1.8% |
|
|---|
| ROIC | -14.2% | -14.4% | -3.3% | 5.6% | 9.4% | 3.8% |
| ROE | | -14.1% | -3.4% | 5.0% | 21.4% | 16.4% |
| Net Debt/EBITDA | | | -8.4x | -3.7x | -3.0x | 0.7x |
People
|
|---|
| Insider ownership | 33.7% | 33.7% | 33.7% | 33.7% | 33.7% | 0.0% |
| Employees | 968 | 1,320 | 1,800 | 2,115 | 2,600 | 22.9% |
| Revenue/Employee, th. $ | 112 | 116 | 128 | 142 | 145 | 2.4% |
Paylocity Holding Corporation ($PCTY) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 82 | 86 | 113 | 97 | | 25.3% | 25.3% | 25.6% | 27.0% |
| EBITDA | 7 | 7 | 28 | 4 | | 308.2% | 116.1% | 35.2% | 51.2% |
| Net Income | 1 | 0 | 39 | -2 | | | | 164.7% | |
Balance Sheet
|
|---|
| Cash | 97 | 111 | 130 | 137 | | 24.9% | 35.0% | 27.7% | 32.6% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 57.1% | 57.2% | 65.9% | 59.9% | | 0.7% | 1.4% | 1.5% | 3.5% |
| EBITDA Margin | 8.8% | 8.0% | 24.4% | 4.6% | | 6.1% | 3.4% | 1.7% | 0.7% |
| Net Income Margin | 0.7% | 0.5% | 34.5% | -1.6% | | 4.6% | 2.9% | 18.1% | 3.4% |
Peers in Application Software
Below we provide Paylocity Holding Corporation benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (150 companies) | 27.9% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| Paylocity Holding Corporation ($PCTY) | | 40.5% | 51.1% | 30.0% | 25.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (149 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 66.0% |
|---|
| Paylocity Holding Corporation ($PCTY) | 49.3% | 53.6% | 57.5% | 58.7% | 60.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (151 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| Paylocity Holding Corporation ($PCTY) | -0.6% | -3.5% | 4.5% | 9.4% | 12.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (152 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Paylocity Holding Corporation ($PCTY) | 10.1% | 8.7% | 10.6% | 11.7% | 9.9% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (178 companies) | -14.4% | -11.2% | -9.8% | -11.8% | -9.8% |
|---|
| Paylocity Holding Corporation ($PCTY) | -14.2% | -14.4% | -3.3% | 5.6% | 9.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.4x | -1.0x | -0.9x | -0.8x | -0.6x |
|---|
| Paylocity Holding Corporation ($PCTY) | | | -8.4x | -3.7x | -3.0x |
