Paylocity Hlds (PCTY) Stock Forecast & Price Target

Paylocity demonstrated strong financial performance in fiscal 2025, generating over $1.5 billion in revenue, with total revenue increasing by 10.4% year-over-year to $416.1 million, surpassing expectations. The company's recurring revenue also showed robust growth, rising by 14% year-over-year to $379 million, and adjusted recurring revenue reached $387 million, reflecting improved productivity and higher client workforce levels. Furthermore, Paylocity's operational efficiencies were indicated by rising gross margins and projected fiscal year 2026 revenue guidance of approximately $1.732 to $1.742 billion, showcasing a solid growth trajectory relative to its software peers.

Paylocity Holding faces significant headwinds that are contributing to a negative outlook, including a broad-based selloff in the software sector that has resulted in a compression of revenue multiples despite the company’s solid fundamentals. A notable risk is the dependency on its broker channel for 25% of new bookings, which could be affected by external disruptions, potentially leading to lower overall bookings amidst slowing new business formations and competitive pressures in the mid-market space. Additionally, macroeconomic uncertainties, including job losses and regulatory compliance challenges, may further strain client retention and increase the risk of customer churn, thereby impacting future revenue growth.