Momentum we saw in the first half of the year continued into Q3, which included a strong selling season performance by our sales and operation teams and helped to drive 11.6% recurring and other revenue growth in the quarter and increased guidance for fiscal '26.
— Steven Beauchamp
03Detailed Report
PCTY
Company PCTY
Period
Q3 2026
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 22, 2026
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Executive Summary
Paylocity reported a strong Q3 FY2026 with continued momentum across core HCM, payroll, and IT platforms. Recurring and other revenue totaled $469.9 million, up 11.6% year over year, while total revenue reached $502.3 million, up 10.5% year over year and $10.3 million above the top end of initial guidance. The quarter featured meaningful margin expansion and robust free cash flow generation, underscored by an adjusted EBITDA of $220.2 million (43.8% margin) and GAAP net income of $111.3 million. Through the first nine months of fiscal 2026, Paylocity delivered 60 basis points of adjusted gross margin leverage and a 27% increase in cash provided by operating activities, highlighting durable profitability and scale. Management emphasized a multi-year AI-centric product strategy, including the integration of AI into core workflows, the acquisition of Grayscale to accelerate recruiting automation, and the launch of Paylocity Elevate to deliver higher-touch payroll/HR service models. The company raised full-year 2026 guidance across recurring revenue, total revenue, and adjusted EBITDA at the midpoint, reflecting confidence in continued execution as we head into the year-end season and beyond.
Key Performance Indicators
Revenue
Increasing
502.29M
QoQ: 20.70% | YoY: 33.24%
Gross Profit
Increasing
363.19M
72.31% margin
QoQ: 28.73% | YoY: 43.87%
Operating Income
Increasing
156.76M
QoQ: 122.04% | YoY: 236.23%
Net Income
Increasing
111.25M
QoQ: 121.63% | YoY: 196.94%
EPS
Increasing
2.06
QoQ: 121.51% | YoY: 207.46%
Revenue Trend
Margin Analysis
Financial Highlights
Revenue and profitability snapshots (Q3 FY2026):
- Revenue: $502.286 million (YoY +10.5%), Recurring and Other Revenue: $469.9 million (YoY +11.6%)
- Gross Profit: $363.188 million; Gross Margin: 72.31%
- Operating Income: $156.760 million; Operating Margin: 31.21%
- Net Income: $111.250 million; Net Margin: 22.15%
- Adjusted EBITDA: $220.2 million; Adjusted EBITDA Margin: 43.8%
- EPS (GAAP): $2.06; EPS (Diluted): $2.04; Weighted Avg Shs Out: 54.28 million (GAAP), 55.02 million (Diluted)
- Balance sheet: Cash & equivalents $299.7 million; Debt $81.3 million
- Client funds: Average diluted client funds $3.8 billion; Q4 expected balance ~$3.2 billion; yield ~330 bps; Q4 interest income ~$26.2 million; full-year ~ $117 million in interest income
- Cash flow: 9-month cash from operations up 27% YoY; Free cash flow up 25% YoY; FCF margin >24% over trailing 12 months
- Capital allocation: Q3 share repurchases ~440k shares for ~$50 million; YTD ~2.3 million shares for ~$350 million; Board authorized additional $1 billion buyback
- Guidance (FY26): Q4 Recurring & Other Revenue $402.2–$407.2 million (9%–10% YoY); Q4 Total Revenue $428.4–$433.4 million (7%–8% YoY); Q4 Adjusted EBITDA $128.6–$132.6 million (excludes interest income: $102.4–$106.4 million)
- Guidance (FY26 full year): Recurring & Other Revenue $1.638–$1.643 billion (11%–12% YoY); Total Revenue $1.755–$1.760 billion (about 10% YoY); Adjusted EBITDA $638–$642 million (excludes interest income: $521–$525 million)
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
502.29M
33.24%
20.70%
Gross Profit
363.19M
43.87%
28.73%
Operating Income
156.76M
236.23%
122.04%
Net Income
111.25M
196.94%
121.63%
EPS
2.06
207.46%
121.51%
Key Financial Ratios
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