Paylocity posted solid QQ1 2026 results, underscored by durable recurring revenue growth and a favorable mix shift toward higher-margin, AI-enabled solutions. Total revenue reached $408.2 million, up 12% year over year with recurring and other revenues up 14%. Management highlighted the ongoing AI momentum across the platform, including the launch of Paylocity for Finance and the expanded AI assistant capabilities, which contributed to higher product penetration, improved user experience, and a wider addressable market across HR, Finance, and IT. The company also reaffirmed and raised full‑year guidance, and issued a substantial upgrade to long‑term financial targets, signaling confidence in scalable profitability and free cash flow generation driven by AI-driven automation and disciplined cost management. The broker channel remains a material growth engine (>25% of new business in Q1), and Airbase (spend management) is progressing as a meaningful cross-sell opportunity with early traction in new client and net-new deployments. While near-term macro headwinds are considered manageable and the workforce footprint at client sites remained stable, the company cautions that the onetime tax and regulatory tailwinds observed in FY26 are not recurring and should be treated as non‑core in tightening future forecasts. The result is a constructive growth outlook, with a path to $3 billion in revenue and 80%+ gross margins over the longer horizon, supported by a 40%–45% adjusted EBITDA margin target and 25%–30% free cash flow margin.