Paylocity Announces Third Quarter Fiscal Year 2014 Financial Results - WTRF 7 News Sports Weather - Wheeling Steubenville

Paylocity Announces Third Quarter Fiscal Year 2014 Financial Results

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SOURCE Paylocity Holding Corporation

- Total Revenue of $33.8 million, up 41% year over year

- Recurring Revenue of $31.2 million, up 40% year over year

- Completed initial public offering raising net proceeds of $82 million

ARLINGTON HEIGHTS, Ill., May 8, 2014 /PRNewswire/ -- Paylocity Holding Corporation (Nasdaq: PCTY), a cloud-based provider of payroll and human capital management software solutions, today announced financial results for its third quarter of fiscal year 2014, which ended March 31, 2014.

"Our third quarter results demonstrated that our business continues to perform well across all of our key metrics," said Steve Beauchamp, President and Chief Executive Officer of Paylocity.  "The third quarter is always our highest revenue quarter and this year was no exception. However, not only did we see the seasonal boost of high gross margin fees for annual filings, we saw higher demand for our cloud-based, unified payroll and HCM solutions as mid-sized companies seek to leverage their payroll system to more proactively manage their human capital.  We believe we are in the early stages of a major market share shift from traditional payroll service providers to cloud-based software and that Paylocity is uniquely positioned to capitalize on this trend in a multi-billion dollar market opportunity." 

Beauchamp added, "Our recent IPO was a key milestone for Paylocity which further increases our market profile and provides additional financial resources to execute on our growth initiatives."

Third Quarter 2014 Financial Highlights

Revenue:

  • Total revenue was $33.8 million, an increase of 41% from the third quarter of fiscal year 2013.
  • Total recurring revenue was $31.2 million, represented 92% of total revenue and increased 40% on a year-over-year basis.

Operating Income:

  • GAAP operating income was $2.1 million, compared to operating income of $2.6 million in the third quarter of fiscal year 2013.
  • Non-GAAP operating income was $3.5 million, compared to non-GAAP operating income of $2.7 million in the third quarter of fiscal year 2013.

Adjusted EBITDA:

  • Adjusted EBITDA, a non-GAAP measure, was $5.2 million for the third quarter of fiscal year 2014 compared to Adjusted EBITDA of $4.2 million for the third quarter of fiscal year 2013.

Net Income:

  • GAAP net income was $1.2 million, compared to net income of $2.0 million for the third quarter of fiscal year 2013. On a pro forma basis to reflect the conversion of all outstanding preferred shares as of July 1, 2013, net income per share for the three months ended March 31, 2014 would have been $0.03, based on 44.9 million diluted weighted average common shares outstanding, compared to net income per share of $0.05 for the third quarter of fiscal year 2013, based on 44.4 million diluted weighted average common shares outstanding.
  • Non-GAAP net income was $2.0 million compared to $2.1 million in the third quarter of fiscal year 2013. On a pro forma basis, non-GAAP net income per share was $0.04 for the third quarter of fiscal year 2014 based on 44.9 million diluted weighted average common shares outstanding, compared to net income per share of $0.05 for the third quarter of fiscal year 2013, based on 44.4 million diluted weighted average common shares outstanding.

Balance Sheet and Cash Flow:

  • Cash and cash equivalents totaled $88.9 million at the end of the quarter.  During the quarter, the company issued and sold 5.4 million shares of common stock at $17 per share raising net proceeds of $82 million.
  • Cash flow from operations for the nine months ended March 31, 2014 was $8.1 million compared to $5.0 million for the same period in fiscal year 2013.

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 May 8, 2014, Paylocity is issuing guidance for the fourth quarter and full fiscal year 2014 as indicated below.

Fourth Quarter 2014:

  • Total revenue is expected to be in the range of $26 million to $27 million.
  • Adjusted EBITDA is expected to be a loss in the range of $(2.3) million to $(1.3) million.
  • Non-GAAP net loss is expected to be in the range of ($2.8) million to ($1.8) million, or $(0.06) to $(0.04) per share, based on 49.6 million basic weighted average common shares outstanding. This guidance assumes an income tax benefit of approximately $1.2 million.

Fiscal Year 2014:

  • Total revenue is expected to be in the range of $106 million to $107 million.
  • Adjusted EBITDA is expected to be in the range of $3.4 million to $4.4 million.
  • On a pro forma basis to reflect the conversion of all outstanding preferred shares as of July 1, 2013, non-GAAP net loss is expected to be in the range of ($2.2) million to $(1.2) million, or $(0.05) to $(0.03) per share, based on 45.4 million basic weighted average common shares outstanding. This guidance assumes an income tax benefit of approximately $0.8 million.

Conference Call Details

Paylocity will host a conference call to discuss its third quarter 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 (315) 625-6892 or (855) 226-302, passcode 31332532. 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, non-GAAP net income and non-GAAP net income 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. Adjusted gross profit and adjusted recurring gross profit are adjusted for stock-based compensation expense and amortization of capitalized research and development costs. Non-GAAP operating income, non-GAAP net income and non-GAAP net income per share are adjusted for stock-based compensation expense. 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; 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.  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.

Investor Contact:
Sheila Ennis
ICR
investors@paylocity.com
415-430-2073

 

PAYLOCITY HOLDING CORPORATION

Unaudited Consolidated Balance Sheets

 (In thousands)





June 30,
2013

March 31,
2014

Assets



Current assets:



   Cash and cash equivalents

$7,594

$88,944

   Accounts receivable, net

740

791

   Prepaid expenses and other

1,875

3,160

   Taxes receivable

-

131

   Deferred income tax assets, net

602

563

     Total current assets before funds held for clients

10,811

93,589

   Funds held for clients

355,905

541,723

     Total current assets

366,716

635,312

Long-term prepaid expenses

-

344

Capitalized software, net

2,614

3,800

Property and equipment, net

8,586

12,142

       Total assets

$377,916

$651,598

Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)



Current liabilities:



   Current portion of long-term debt

$625

$ -

   Accounts payable

880

3,088

   Taxes payable

207

-

   Accrued expenses

6,794

10,572

     Total current liabilities before client fund obligations

8,506

13,660

   Client fund obligations

355,905

541,723

     Total current liabilities

364,411

555,383

Long-term debt, net of current portion

938

-

Deferred income tax liabilities, net

269

172

Deferred rent

2,317

2,647

       Total liabilities

$367,935

$558,202

Redeemable convertible preferred stock, $0.001 par value, 18,000 authorized as of June 30, 2013 and no shares authorized as of March 31, 2014



Series A, 6% cumulative dividend, 9,500 shares issued and outstanding as of June 30, 2013 and no shares issued and outstanding March 31, 2014

9,339

-

Series B, 8% cumulative dividend, 8,400 shares issued and outstanding at June 30, 2013 and no shares issued and outstanding March 31, 2014

27,234

-

Stockholders' equity (deficit)



Common stock, $0.001 par value, 66,667 authorized, 31,988 shares issued and outstanding as of June 30, 2013 and 155,000 authorized, 49,564 shares issued and outstanding March 31, 2014    

32

50

Preferred stock, $0.001 par value, no shares authorized, issued and outstanding as of June 30, 2013 and 5,000 authorized, no shares issued and outstanding as of March 31, 2014

-

-

Additional paid-in capital

437

120,813

Accumulated deficit

(27,061)

(27,467)

Total stockholders' equity (deficit)

(26,592)

93,396

Total liabilities, redeemable convertible preferred stock, and stockholders' equity (deficit)               

$377,916

$651,598

 

 

PAYLOCITY HOLDING CORPORATION

Unaudited Consolidated Statements of Operations

 (In thousands, except per share data)





Three months ended
March 31,

Nine months ended
March 31,


2013

2014

2013

2014

Revenues





   Recurring fees

$21,824

$30,719

$52,463

$73,602

   Interest income on funds held for clients

447

491

1,072

1,222

     Total recurring revenues

22,271

31,210

53,535

74,824

   Implementation services and other

1,735

2,556

3,497

5,216

Total revenues

24,006

33,766

57,032

80,040

Cost of revenues





   Recurring revenues

7,896

10,246

21,190

27,320

   Implementation services and other

2,838

4,679

7,600

12,670

     Total cost of revenues

10,734

14,925

28,790

39,990

Gross profit

13,272

18,841

28,242

40,050

Operating expenses





   Sales and marketing

5,888

8,678

13,714

19,290

   Research and development

1,852

2,443

4,906

6,746

   General and administrative

2,928

5,587

8,722

14,726

Total operating expenses

10,668

16,708

27,342

40,762

     Operating income (loss)

2,604

2,133

900

(712)

Other income (expense)

(8)

59

(17)

109

     Income (loss) before income taxes

2,596

2,192

883

(603)

Income tax (expense) benefit

(575)

(1,042)

106

197

Net income (loss)

$2,021

$1,150

$989

$(406)

Net income (loss) attributable to common stockholders

$1,294

$430

$(1,192)

$(2,688)

Net income (loss) per share attributable to common stockholders, basic and diluted

$0.03

$0.01

$(0.04)

$(0.08)

Weighted average number of shares of common stock used in computing net loss per share attributable to common stockholders:





Basic

43,921

44,360

31,988

32,437

Diluted

44,407

44,870

31,988

32,437

 

Stock-based compensation included in the above line items:  


Three months ended
March 31,

Nine months ended
March 31,


2013

2014

2013

2014

Cost of revenue - recurring

$-

$113

$-

$113

Cost of revenue -  non-recurring

-

97

-

97

Sales and marketing

-

175

-

175

Research and development

-

139

-

139

General and administrative

130

841

392

1,190

Total stock-based compensation

$130

$1,365

$392

$1,714

 

 

PAYLOCITY HOLDING CORPORATION

Unaudited Consolidated Statements of Cash Flows

 (In thousands)




Nine Months Ended
March 31,


2013

2014

Cash flows from operating activities:



   Net income (loss)

$989

$(406)

   Adjustments to reconcile net income (loss) to net cash provided by operating activities:



     Stock-based compensation

392

1,714

     Depreciation and amortization

4,145

4,544

     Deferred income tax benefit

(386)

(58)

     Provision for doubtful accounts

45

79

     Changes in operating assets and liabilities:



       Increase in accounts receivable

(206)

(130)

       Increase in prepaid expenses

(1,547)

(1,629)

       Increase in trade accounts payable

203

947

       Increase in accrued expenses

1,406

3,016

          Net cash provided by operating activities

5,041

8,077

Cash flows from investing activities:



   Capitalized internally developed software costs

(1,115)

(2,919)

   Purchases of property and equipment

(2,865)

(4,954)

   Net change in funds held for clients

(189,935)

(185,818)

          Net cash used in investing activities

(193,915)

(193,691)

Cash flows from financing activities:



   Net change in client funds obligation

189,935

185,818

   Principal payments on long-term debt

(1,469)

(1,563)

   Proceeds from initial public offering, net of issuance costs

-

82,709

   Proceeds from exercise of stock options

76

-

   Payments for redemption of Common Shares

(162)

-

          Net cash provided by financing activities

188,380

266,964

Net Change in Cash and Cash Equivalents

(494)

81,350

Cash and Cash Equivalents-Beginning of Period

9,031

7,594

Cash and Cash Equivalents-End of Period

$8,537

$88,944

Supplemental disclosure of non-cash investing and financing activities



   Build-out allowance received from landlord

$325

$580

   Purchases of property and equipment, accrued but not paid

$68

$784

   Unpaid initial offering costs

-

$678

Supplemental disclosure of cash flow information



   Cash paid for income taxes

$56

$202

   Cash paid for interest

$353

$70

 

Paylocity Holding Corporation

Reconciliation of GAAP to non-GAAP Financial Measures

(In thousands except per share data)








Three months
Ended
March 31,


Nine months
Ended
March 31,


2013

2014


2013

2014

Reconciliation from gross profit to adjusted gross profit:






Gross profit

$ 13,272

$ 18,841


$ 28,242

$ 40,050

Amortization of capitalized research and development costs

751

580


2,346

1,809

Stock-based compensation expense

-

210


-

210

Adjusted gross profit

$ 14,023

$ 19,631


$ 30,588

$ 42,069








Three months
Ended
March 31,


Nine months
Ended
March 31,


2013

2014


2013

2014

Reconciliation from total recurring revenues to adjusted recurring gross profit:






Total recurring revenues

$ 22,271

$ 31,210


$ 53,535

$ 74,824

Cost of recurring revenues

7,896

10,246


21,190

27,320

Recurring gross profit

14,375

20,964


32,345

47,504

Amortization of capitalized research and development costs

751

580


2,346

1,809

Stock-based compensation expense

-

113


-

113

Adjusted recurring gross profit

$ 15,126

$ 21,657


$ 34,691

$ 49,426








Three months
Ended
March 31,


Nine months
Ended
March 31,


2013

2014


2013

2014

Reconciliation from operating income (loss) to non-GAAP operating income:






Operating income (loss)

$   2,604

$   2,133


$      900

$    (712)

Stock-based compensation expense

130

1,365


392

1,714

Non-GAAP operating income

$   2,734

$   3,498


$   1,292

$   1,002








Three months
Ended
March 31,


Nine months
Ended
March 31,


2013

2014


2013

2014

Reconciliation from net income (loss) to Adjusted EBITDA:






Net income (loss)

$   2,021

$   1,150


$      989

$    (406)

Interest expense

43

22


162

67

Income tax expense (benefit)

575

1,042


(106)

(197)

Depreciation and amortization

1,412

1,620


4,145

4,544

EBITDA

4,051

3,834


5,190

4,008

Stock-based compensation expense

130

1,365


392

1,714

Adjusted EBITDA

$   4,181

$   5,199


$   5,582

$   5,722








Three months
Ended
March 31,


Nine months
Ended
March 31,


2013

2014


2013

2014

Reconciliation from net income (loss) to non-GAAP net income:






Net income (loss)

$   2,021

$   1,150


$      989

$    (406)

Stock-based compensation expense, net of tax

79

833


240

1,046

Non-GAAP net income 

$   2,100

$   1,983


$   1,229

$     640








Three months
Ended
March 31,


Nine months
Ended
March 31,


2013

2014


2013

2014

Calculation of non-GAAP net income per share:






Non-GAAP net income 

$   2,100

$   1,983


$   1,229

$      640

Pro forma weighted average number of shares of common stock

44,407

44,870


44,407

44,576

Non-GAAP net income per share

$     0.05

$     0.04


$     0.03

$     0.01







SOURCE: Paylocity

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