ARLINGTON HEIGHTS, Ill., Aug. 14, 2014 (GLOBE NEWSWIRE) -- Paylocity Holding Corporation (Nasdaq:PCTY), a cloud-based provider of payroll and human capital management software solutions, today announced financial results for the fourth quarter and full fiscal year 2014, which ended June 30, 2014.
"Paylocity wrapped up an exciting fiscal year with an excellent fourth quarter highlighted by revenue growth in excess of 40% driven by strong sales execution and best in class revenue retention," said Steve Beauchamp, President and Chief Executive Officer of Paylocity. "We ended the year with 8,500 clients, a 24% increase over fiscal 2013 while at the same time we expanded our broker referral channel to over 1,000 partners who were responsible for providing leads that generated more than 25% of our new business revenue. We also increased R&D investment in our leading HCM platform recently announcing availability of both our new on boarding and benefits products."
Fourth Quarter 2014 Financial Highlights
Revenue:
Adjusted EBITDA:
Operating Loss:
Net Loss:
Fiscal Year 2014 Financial Highlights
Revenue:
Adjusted EBITDA:
Operating Income (Loss):
Net Income (Loss):
Balance Sheet and Cash Flow:
A reconciliation of GAAP to non-GAAP financial measures has been provided in this press release, including the accompanying tables. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."
Business Outlook
Based on information available as of August 14, 2014, Paylocity is issuing guidance for the first quarter and full fiscal year 2015 as indicated below.
First Quarter 2015:
Fiscal Year 2015:
Conference Call Details
Paylocity will host a conference call to discuss its fourth quarter and fiscal year 2014 results at 4:00 p.m. Central Time today (5:00 Eastern Time). A live audio webcast of the conference call, together with detailed financial information, can be accessed through the company's Investor Relations Web site at http://www.paylocity.com. Participants who choose to call in to the conference call can do so by dialing (855) 226-3021 or (315) 625-6892, passcode 74624017. A replay of the call will be available and archived via webcast at www.paylocity.com.
About Paylocity
Paylocity is a provider of cloud-based payroll and human capital management, or HCM, software solutions for medium-sized organizations. Paylocity's comprehensive and easy-to-use solutions enable its clients to manage their workforces more effectively. Paylocity's solutions help drive strategic human capital decision-making and improve employee engagement by enhancing the human resource, payroll and finance capabilities of its clients. For more information, visit www.paylocity.com.
Non-GAAP Financial Measures
The company uses certain non-GAAP financial measures in this release, including Adjusted EBITDA, adjusted gross profit, adjusted recurring gross profit, non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP net income (loss) per share. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. We define Adjusted EBITDA as net income (loss) before interest expense, taxes, and depreciation and amortization expense, adjusted to eliminate stock-based compensation expense and a one-time founder-funded bonus pay-out. Adjusted gross profit and adjusted recurring gross profit are adjusted for stock-based compensation expense, a one-time founder-funded bonus pay-out and amortization of capitalized research and development costs. Non-GAAP operating income (loss), non-GAAP net income (loss) and non-GAAP net income (loss) per share are adjusted for stock-based compensation expense and a one-time founder-funded bonus pay-out. Please note that other companies may define their non-GAAP financial measures differently than we do. Management presents certain non-GAAP financial measures in this release because it considers them to be important supplemental measures of performance. Management uses these non-GAAP financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management believes that these non-GAAP financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. Management also intends to provide these non-GAAP financial measures as part of the company's future earnings discussions and, therefore, the inclusion of the non-GAAP financial measures should provide consistency in the company's financial reporting. Non-GAAP financial measures have limitations as an analytical tool. Investors are encouraged to review the reconciliation of the non-GAAP measures to their most directly comparable GAAP measures provided in this release.
Safe Harbor/forward looking statements
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included herein regarding Paylocity's future operations, future financial position and performance, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "will," "would," "seek" and similar expressions (or the negative of these terms) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about management's estimates regarding future revenues and financial performance and other statements about management's beliefs, intentions or goals. Paylocity may not actually achieve the expectations disclosed in the forward-looking statements, and you should not place undue reliance on Paylocity's forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to differ materially from the expectations disclosed in the forward-looking statements, including, but not limited to, risks related to Paylocity's ability to attract new clients to enter into subscriptions for its services; Paylocity's ability to service clients effectively; Paylocity's ability to expand its sales organization to effectively address new geographies; Paylocity's ability to continue to expand its referral network of third parties; Paylocity's ability to accurately forecast revenue and appropriately plan its expenses; Paylocity's ability to forecast its tax position, including but not limited to the assessment of the need for a valuation allowance against its deferred tax position; continued acceptance of SaaS as an effective method for delivery of payroll and HCM solutions; Paylocity's ability to protect and defend its intellectual property; unexpected events in the market for Paylocity's solutions; future regulatory, judicial and legislative changes in its industry; changes in the competitive environment in Paylocity's industry and the market in which it operates; and other risks and potential factors that could affect Paylocity's business and financial results identified in Paylocity's filings with the Securities and Exchange Commission (the "SEC"), including its prospectus filed with the SEC pursuant to Rule 424(b)(4) on March 19, 2014 and its 10-Q filed with the SEC on May 14, 2014. Additional information will also be set forth in Paylocity's future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that Paylocity makes with the SEC. These forward-looking statements represent Paylocity's expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Paylocity disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.
PAYLOCITY HOLDING CORPORATION | ||
Consolidated Balance Sheets | ||
(in thousands, except share and per share data) | ||
As of June 30, | ||
Assets | 2013 | 2014 |
Current assets: | ||
Cash and cash equivalents | $7,594 | $78,848 |
Accounts receivable, net | 740 | 756 |
Prepaid expenses and other | 1,875 | 2,694 |
Deferred income tax assets, net | 602 | 706 |
Total current assets before funds held for clients | 10,811 | 83,004 |
Funds held for clients | 355,905 | 417,261 |
Total current assets | 366,716 | 500,265 |
Long-term prepaid expenses | — | 313 |
Capitalized software, net | 2,614 | 5,093 |
Property and equipment, net | 8,586 | 13,125 |
Intangible assets, net | — | 6,320 |
Goodwill | — | 3,035 |
Total assets | $377,916 | $528,151 |
Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) | ||
Current liabilities: | ||
Current portion of long‑term debt | $625 | $— |
Accounts payable | 880 | 2,133 |
Taxes payable | 207 | 5 |
Consideration related to acquisition | — | 2,985 |
Accrued expenses | 6,794 | 10,744 |
Total current liabilities before client fund obligations | 8,506 | 15,867 |
Client fund obligations | 355,905 | 417,261 |
Total current liabilities | 364,411 | 433,128 |
Long‑term debt, net of current portion | 938 | — |
Deferred rent | 2,317 | 3,175 |
Deferred income tax liabilities, net | 269 | 714 |
Total liabilities | $367,935 | $437,017 |
Redeemable convertible preferred stock, $0.001 par value, 18,000 authorized as of June 30, 2013 and no shares authorized as of June 30, 2014 | ||
Series A, 6% cumulative dividend, 9,500 shares issued and outstanding at June 30, 2013 and no shares issued and outstanding at June 30, 2014 | $9,339 | $— |
Series B, 8% cumulative dividend, 8,400 shares issued and outstanding at June 30, 2013 and no shares issued and outstanding at June 30, 2014 | 27,234 | — |
Stockholders' equity (deficit) | ||
Common stock, $0.001 par value, 66,667 shares authorized, 31,988 shares issued and outstanding at June 30, 2013; and 155,000 shares authorized, 49,564 shares issued and outstanding at June 30, 2014 | 32 | 50 |
Preferred stock, $0.001 par value, no shares authorized, issued and outstanding at June 30, 2013 and 5,000 authorized, no shares issued and outstanding at June 30, 2014 | — | — |
Additional paid‑in capital | 437 | 125,255 |
Accumulated deficit | (27,061) | (34,171) |
Total stockholders' equity (deficit) | (26,592) | $91,134 |
Total liabilities, redeemable convertible preferred stock, and stockholders' equity (deficit) | $377,916 | $528,151 |
PAYLOCITY HOLDING CORPORATION | |||
Consolidated Statements of Operations | |||
(in thousands, except share and per share data) | |||
For the Years Ended June 30, | |||
2012 | 2013 | 2014 | |
Revenues | |||
Recurring fees | $51,211 | $71,309 | $100,362 |
Interest income on funds held for clients | 1,263 | 1,459 | 1,582 |
Total recurring revenues | 52,474 | 72,768 | 101,944 |
Implementation services and other | 2,622 | 4,526 | 6,743 |
Total revenues | 55,096 | 77,294 | 108,687 |
Cost of revenues | |||
Recurring revenues | 22,054 | 28,863 | 37,319 |
Implementation services and other | 7,040 | 10,803 | 17,775 |
Total cost of revenues | 29,094 | 39,666 | 55,094 |
Gross profit | 26,002 | 37,628 | 53,593 |
Operating expenses | |||
Sales and marketing | 12,828 | 18,693 | 28,276 |
Research and development | 1,788 | 6,825 | 10,355 |
General and administrative | 8,618 | 12,079 | 21,980 |
Total operating expenses | 23,234 | 37,597 | 60,611 |
Operating income (loss) | 2,768 | 31 | (7,018) |
Other income (expense) | (196) | (16) | 163 |
Income (loss) before income taxes | 2,572 | 15 | (6,855) |
Income tax (benefit) expense | 884 | (602) | 255 |
Net income (loss) | $1,688 | $617 | $(7,110) |
Net income (loss) attributable to common stockholders | $998 | $(2,291) | $(9,392) |
Net income (loss) per share attributable to common stockholders: | |||
Basic | $0.02 | $(0.07) | $(0.26) |
Diluted | $0.02 | $(0.07) | $(0.26) |
Weighted‑average shares used in computing net income (loss) per share attributable to common stockholders: | |||
Basic | 43,873 | 31,988 | 36,707 |
Diluted | 44,317 | 31,988 | 36,707 |
Stock-based compensation for each of the three years ended June 30 and a one-time founder funded bonus pay-out in the year ended June 30, 2014, are included in the above line items:
For the Years Ended June 30, | |||
2012 | 2013 | 2014 | |
Cost of revenue - recurring | $-- | $-- | $638 |
Cost of revenue -- implementation services and other | -- | -- | 603 |
Sales and marketing | -- | -- | 930 |
Research and development | -- | -- | 970 |
General and administrative | 203 | 523 | 2,759 |
Total stock-based compensation and one-time founder funded bonus pay-out | $203 | $523 | $5,900 |
PAYLOCITY HOLDING CORPORATION | |||
Consolidated Statements of Cash Flows | |||
(in thousands) | |||
For the Years Ended June 30, | |||
2012 | 2013 | 2014 | |
Cash flows provided by operating activities: | |||
Net income (loss) | $1,688 | $617 | $(7,110) |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Stock‑based compensation | 203 | 523 | 4,929 |
Depreciation and amortization | 4,624 | 5,571 | 6,336 |
Deferred income tax (benefit) expense | 838 | (822) | 341 |
Provision for doubtful accounts | 60 | 60 | 62 |
Loss on disposal of equipment | — | — | 98 |
Changes in operating assets and liabilities: | |||
Accounts receivable | 287 | (295) | (78) |
Prepaid expenses | (247) | (1,061) | (1,132) |
Trade accounts payable | 102 | 138 | 465 |
Accrued expenses | 1,009 | 1,497 | 3,288 |
Net cash provided by operating activities | 8,564 | 6,228 | 7,199 |
Cash flows from investing activities: | |||
Capitalized internally developed software costs | (3,716) | (1,967) | (4,349) |
Purchases of property and equipment | (3,446) | (3,987) | (6,667) |
Payments for acquisition | — | — | (6,450) |
Net change in funds held for clients | 35,724 | (92,650) | (61,356) |
Net cash provided by (used in) investing activities | 28,562 | (98,604) | (78,822) |
Cash flows from financing activities: | |||
Net change in client funds obligation | (35,724) | 92,650 | 61,356 |
Principal payments on long‑term debt | (312) | (1,625) | (1,563) |
Proceeds from initial public offering, net of issuance costs | — | — | 82,032 |
Capital contribution | — | — | 1,052 |
Proceeds from issuance of Redeemable Convertible Preferred Series B Shares | 27,234 | — | — |
Proceeds from exercise of stock options | 88 | 76 | — |
Payments for redemption of Common Shares | (27,371) | (162) | — |
Net cash (used in) provided by financing activities | (36,085) | 90,939 | 142,877 |
Net Change in Cash and Cash Equivalents | 1,041 | (1,437) | 71,254 |
Cash and Cash Equivalents—Beginning of Year | 7,990 | 9,031 | 7,594 |
Cash and Cash Equivalents—End of Year | $9,031 | $7,594 | $78,848 |
Supplemental Disclosure of Non‑Cash Investing and Financing Activities | |||
Build‑out allowance received from landlord | $333 | $325 | $1,162 |
Purchase of property and equipment, accrued but not paid | $392 | $27 | $896 |
Unpaid initial offering costs | — | — | $75 |
Supplemental disclosure of cash flow information | |||
Cash paid for income taxes | $7 | $69 | $106 |
Cash paid for interest | $161 | $385 | $70 |
Paylocity Holding Corporation | ||||
Reconciliation of GAAP to non-GAAP Financial Measures | ||||
(In thousands except per share data) | ||||
Three months Ended June 30, |
For the year Ended June 30, |
|||
2013 | 2014 | 2013 | 2014 | |
Reconciliation from gross profit to adjusted gross profit: | ||||
Gross profit | $ 9,386 | $ 13,543 | $ 37,628 | $ 53,593 |
Amortization of capitalized research and development costs | 721 | 385 | 3,067 | 2,195 |
Stock-based compensation expense | -- | 709 | -- | 920 |
One-time founder funded bonus pay-out | -- | 321 | -- | 321 |
Adjusted gross profit | $ 10,107 | $ 14,958 | $ 40,695 | $ 57,029 |
Three months Ended June 30, |
For the year Ended June 30, |
|||
2013 | 2014 | 2013 | 2014 | |
Reconciliation from total recurring revenues to adjusted recurring gross profit: | ||||
Total recurring revenues | $ 19,233 | $ 27,120 | $ 72,768 | $ 101,944 |
Cost of recurring revenues | 7,673 | 9,999 | 28,863 | 37,319 |
Recurring gross profit | 11,560 | 17,121 | 43,905 | 64,625 |
Amortization of capitalized research and development costs | 721 | 385 | 3,067 | 2,195 |
Stock-based compensation expense | -- | 382 | -- | 496 |
One-time founder funded bonus pay-out | -- | 142 | -- | 142 |
Adjusted recurring gross profit | $ 12,281 | $ 18,030 | $ 46,972 | $ 67,458 |
Three months Ended June 30, |
For the year Ended June 30, |
|||
2013 | 2014 | 2013 | 2014 | |
Reconciliation from net income (loss) to Adjusted EBITDA: | ||||
Net income (loss) | $ (372) | $ (6,704) | $ 617 | $ (7,110) |
Interest expense | 30 | -- | 192 | 67 |
Income tax expense (benefit) | (496) | 452 | (602) | 255 |
Depreciation and amortization | 1,426 | 1,792 | 5,571 | 6,336 |
EBITDA | 588 | (4,460) | 5,778 | (452) |
Stock-based compensation expense | 131 | 3,215 | 523 | 4,929 |
One-time founder funded bonus pay-out | -- | 971 | -- | 971 |
Adjusted EBITDA | $ 719 | $ (274) | $ 6,301 | $ 5,448 |
Three months Ended June 30, |
For the year Ended June 30, |
|||
2013 | 2014 | 2013 | 2014 | |
Reconciliation from operating income (loss) to non-GAAP operating income (loss): | ||||
Operating income (loss) | $ (869) | $ (6,306) | $ 31 | $ (7,018) |
Stock-based compensation expense | 131 | 3,215 | 523 | 4,929 |
One-time founder funded bonus pay-out | -- | 971 | -- | 971 |
Non-GAAP operating income (loss) | $ (738) | $ (2,120) | $ 554 | $ (1,118) |
Three months Ended June 30, |
For the year Ended June 30, |
|||
2013 | 2014 | 2013 | 2014 | |
Reconciliation from net income (loss) to non-GAAP net income (loss): | ||||
Net income (loss) | $ (372) | $ (6,704) | $ 617 | $ (7,110) |
Stock-based compensation expense, net of tax | 80 | 3,215 | 319 | 4,929 |
One-time founder funded bonus pay-out | -- | 971 | -- | 971 |
Amortization of acquired intangibles | -- | 80 | -- | 80 |
Non-GAAP net income (loss) | $ (292) | $ (2,438) | $ 936 | $ (1,130) |
Three months Ended June 30, |
For the year Ended June 30, |
|||
2013 | 2014 | 2013 | 2014 | |
Calculation of non-GAAP net income (loss) per share: | ||||
Non-GAAP net income (loss) | $ (292) | $ (2,438) | $ 936 | $ (1,130) |
Pro forma weighted average number of shares of common stock | 43,921 | 49,564 | 44,748 | 45,436 |
Non-GAAP net income (loss) per share | $ (0.01) | $ (0.05) | $ 0.02 | $ (0.02) |