Paylocity Wins Amid the War for Talent and a Bounce-Back in Labor Markets; $212 FVE Maintained

Paylocity delivered strong second-quarter fiscal 2022 results underpinned by a continued normalization of employment levels and growing demand for solutions to attract, manage, and retain employees amid fierce competition for labor and dispersed workforces. Following strong sales activity during the quarter and robust client retention, we have marginally lifted our full-year revenue and adjusted EBITDA forecasts 1% and 4%, respectively, to align with updated near-term guidance. Our medium-term forecasts and $212 fair value estimate remain unchanged. We expect EPS to increase 14% to $1.48 in fiscal 2022, before growing at a CAGR of 32% to fiscal 2031 as Paylocity continues to grow scale and achieves operating leverage. After a market pullback in recent weeks, Paylocity screens as fairly valued trading in line with our valuation.