The company owns the US mid-market rather than chasing the global enterprise market like some competitors. By unifying HR and finance data, they increase average revenue per client, which reached just over $35,300 in fiscal year 2025, up approximately 8% from the prior year. Recurring revenue hit $1,471.8 million in fiscal year 2025, up 15% year-over-year.
Cyborg Score Rationale
Paylocity reported total revenue reaching $416.1 million in Q2 FY2026 with a 10% increase, and recurring revenue grew by 11% to $387 million. The company maintains a gross margin of 68.81% and operating margin of 19.15%, reflecting strong profitability and efficient cost management. Free Cash Flow was robust at $342.8 million for FY2025 (21.5% of revenue), enabling $150 million in share repurchases and continued R&D investment.
Top Insights
Dominant in US mid-market HCM with differentiated focus versus global enterprise competitors
Diversifying revenue through HR-finance integration and expanding platform capabilities (AI, spend management)
Strong FCF generation supporting 21.5% free cash flow margin and active capital allocation
Q2 FY2026 beat expectations with 10% revenue growth and raised full-year guidance
Named Competitors
ADP — Global leader in payroll and HR solutions
Paychex — Payroll and HR services for SMBs
Workday — Enterprise-level HCM and financial management
Gusto — Payroll and HR for small businesses
Recent Developments
(February 2026) Q2 FY2026 earnings call held with updated long-term financial targets and increased margin guidance
(November 2025) Q1 FY2026 reported $408.2M revenue (+12% YoY) and $200M share repurchase program
(November 2025) Announced updated long-term financial targets with increased Adjusted EBITDA and Free Cash Flow margin targets
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