Paylocity Earnings: Net Client Growth and Greater Product Attach Support Sound Fiscal 2024 Results

Narrow-moat Paylocity’s fourth-quarter and full-year fiscal 2024 results met our top-line and profitability expectations. However, we lower our fair value estimate to $195 per share from $205 on disappointing near-term guidance relative to our expectations. We believe Paylocity, like other nascent payroll and HCM peers, is facing fiercer competitive pressure from incumbent providers like ADP, tempering growth over the longer term relative to our prior outlook. Nevertheless, the firm has an attractive growth runway with opportunity to displace rudimentary solutions and upsell incremental modules, and shares continue to screen as attractive on a risk-adjusted basis.