Paylocity Holding Corporation PCTY shares gained 4.24% in after-hours trading on Feb. 6 to $221.00 following impressive second-quarter fiscal 2025 results.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

PCTY reported second-quarter fiscal 2025 non-GAAP earnings of $1.52 per share, beating the Zacks Consensus Estimate by 9.35%. The bottom line increased 2% year over year, driven by robust sales performance, efficient operations, and acquisitions that expanded revenue streams and market reach.

PCTY’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 18.26%.

Paylocity’s revenues rose 16% year over year to $377 million and surpassed the Zacks Consensus Estimate by 2.77%.

Top-line growth can be attributed to a 16.5% increase in Recurring and other revenues (92.2% of the total revenues) to $347.7 million. Moreover, Interest income on funds held for clients (7.8% of total revenues) rose 4.7% year over year to $29.3 million.

Quarterly Details

Paylocity’s adjusted gross profit was $278.2 million, up 17.3% from the year-ago period. The adjusted gross margin expanded 110 basis points (bps) to 73.8%.

The non-GAAP operating income rose 9% year over year to $101.1 million. The non-GAAP operating margin contracted 160 bps to 26.8%.

Adjusted EBITDA rose 12% from the year-ago quarter to $126.2 million. The adjusted EBITDA margin for the second quarter of fiscal 2025 moved down 100 bps to 33.5%.

Balance Sheet & Cash Flow Details

As of Dec. 31, 2024, Paylocity’s cash and cash equivalents were $482.4 million compared with $778.5 million as of Sept. 30, 2024.

Long-term debt totaled $325 million as of the second quarter of fiscal 2025 due to borrowings under a credit facility to fund the acquisition of Airbase on Oct. 1, 2024.

The cash flow from operations for the second quarter of fiscal 2025 was $54.2 million compared with $75.1 million from the year-ago period. The free cash flow was $41.9 million for the second quarter of fiscal 2025.

PCTY Raises Q3 & FY25 Guidance

Raised optimism over an upbeat guidance is expected to drive the stock in the near term. For the third quarter of fiscal 2025, the company expects total revenues of $439-$444 million, indicating 10% growth from the year-ago period’s actual. Adjusted EBITDA is projected to be $171-$175 million.

For fiscal 2025, Paylocity projects total revenues between $1.558 billion and $1.568 billion, implying 11% growth from the year-ago quarter’s actual. Adjusted EBITDA is expected to be $542-$555 million.

Zacks Rank & Other Stocks to Consider

Currently, Paylocity carries a Zacks Rank #2 (Buy).

Arista Networks ANET, Freshwork FRSH and Canaan CAN are some other top-ranked stocks that investors can consider in the broader sector.

Arista Networks sports a Zacks Rank #1 (Strong Buy), and Dell Technologies and Workday carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arista Networks shares have returned 4.2% year to date. ANET is set to report fourth-quarter 2024 results on Feb.18.

Shares of Freshwork have risen 13.5% year to date. FRSH is set to post fourth-quarter 2024 results on Feb. 11.

Canaan shares have declined 8.7% year to date. CAN is set to report fourth-quarter 2024 results on Feb.10.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Arista Networks, Inc. (ANET) : Free Stock Analysis Report

Freshworks Inc. (FRSH) : Free Stock Analysis Report

Paylocity Holding Corporation (PCTY) : Free Stock Analysis Report

Canaan Inc. Sponsored ADR (CAN) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research