Paylocity Holding Corporation (PCTY) Fundamental Checkup
Paylocity Holding Corporation fundamental checkup using revenue growth, EPS growth, free cash flow, margins, ROIC, debt-to-equity, and TGMCharts chart exhibits as of September 10, 2026.
Paylocity Holding Corporation gets a balanced fundamental read when revenue growth of 22.75%, EPS growth of 30.87%, free-cash-flow growth of 38.86%, net margin of 15.23%, and ROIC of 18.36% support the same story.
The checkup weighs operating growth, shareholder conversion, cash conversion, reinvestment quality, and balance-sheet flexibility. Current ratio is 1.09x and debt-to-equity is 0.10x, so the balance-sheet read is part of the final view rather than a footnote.
Paylocity Holding Corporation has market cap of $7.65B and closed at $143 on September 10, 2026.
Five-year revenue CAGR is 22.75% and five-year EPS CAGR is 30.87%.
Five-year free-cash-flow CAGR is 38.86%.
Net margin is 15.23% and ROIC is 18.36%.
Current ratio is 1.09x and debt-to-equity is 0.10x.
Fundamental snapshot
The valuation, growth, profitability, and balance-sheet facts behind the checkup.
Cohesive Performance Across Core Operating Metrics
Analyzing Paylocity Holding Corporation requires a unified assessment of whether top-line expansion, bottom-line profitability, and cash generation align. At the market close of $143 on September 10, 2026, the business shows a consistent relationship between its operational momentum and structural cash conversion. Rather than relying on a single positive metric, this research note evaluates the integrity of the entire financial framework.
The core of the thesis rests on a five-year revenue CAGR of 22.75% running alongside a five-year EPS CAGR of 30.87%. When combined with a five-year free cash flow CAGR of 38.86%, these figures suggest that growth is not being achieved at the expense of cash generation. The following sections deconstruct these dynamics to determine if the underlying operational quality remains intact.
Current compounder snapshot · PCTY
Live supporting context; not part of the article's frozen 2026-09-10 evidence snapshot.
Evaluating Software Business Dynamics In The Technology Sector
Operating within the competitive Technology sector, the company must balance high reinvestment demands with consistent margin execution. With a market capitalization of $7.65B, the organization has achieved a scale where operating leverage should theoretically manifest. This snapshot establishes the baseline parameters of growth, capital efficiency, and leverage before analyzing the individual financial statements.
Fundamental evidence table
A compact cross-check of valuation, growth, quality, and financial flexibility.
Revenue history shows whether the business has been expanding before margins and per-share metrics are considered. Q4 FY2026 (2026-06-30): $444.73M.
+583.97% over 10Y
tgmcharts.com
Five-year revenue CAGR: 22.75%. This is endpoint-to-endpoint across the five-year window — a depressed start year can inflate it, so read it against the recent bars.
Five-year revenue CAGR of 22.75% is the top-line test. A fundamental checkup becomes more durable when revenue growth is paired with earnings growth instead of depending only on margin expansion.
Top-Line Velocity Translating Efficiently To Net Income
The relationship between top-line expansion and bottom-line delivery reveals the true efficiency of an enterprise. The five-year revenue CAGR of 22.75% demonstrates sustained demand, but the critical detail is that the five-year EPS CAGR has climbed to 30.87%. This outperformance indicates that the business model is successfully converting incremental sales into shareholder profits, avoiding the common software trap of dilutive growth.
EPS
PCTY EPS
$1.13
EPS history shows how much of the business growth has reached shareholders. Q4 FY2026 (2026-06-30): $1.13.
+2355.49% over 10Y
tgmcharts.com
Five-year EPS CAGR: 30.87%. This is endpoint-to-endpoint across the five-year window — a depressed or negative start year can inflate it, so read it against the recent bars.
Five-year EPS CAGR of 30.87% is the shareholder conversion check. If EPS grows faster than revenue, the note should ask whether that came from margin quality, buybacks, or a temporary base effect.
Free Cash Flow Validates The Quality Of Reported Earnings
Earnings figures can sometimes be distorted by non-cash accounting items, making cash flow the ultimate arbiter of quality. The five-year free cash flow CAGR of 38.86% actually outpaces net income growth, confirming that cash collection is highly efficient. This strong cash generation provides the business with self-funding capability, reducing its reliance on external capital markets to fuel its ongoing expansion.
free cash flow
PCTY free cash flow
$91.26M
Free cash flow checks whether earnings are converting into owner cash. Q4 FY2026 (2026-06-30): $91.26M.
+2406.85% over 10Y
tgmcharts.com
Five-year free-cash-flow CAGR: 38.86%. This is endpoint-to-endpoint across the five-year window — a depressed or negative start year can inflate it, so read it against the recent bars.
Free-cash-flow CAGR of 38.86% is the counterweight to the EPS story. If cash flow lags earnings, the quality of the fundamental setup deserves a more cautious reading.
Strong Return Profiles Reflecting Capital Discipline
Profitability metrics show how efficiently the company manages its day-to-day operations and capital deployment. The business maintains a net margin of 15.23%, demonstrating solid pricing execution relative to its cost structure. Furthermore, the return on invested capital (ROIC) stands at 18.36%, indicating that management is generating high economic returns on the cash reinvested back into the platform.
net margin
PCTY net margin
13.56%
Net margin is the operating-quality check behind the growth record. Q4 FY2026 (2026-06-30): 13.56%.
+17.5pp over 10Y
tgmcharts.com
Net margin (TTM): 15.23%. The bars below are reported fiscal periods (quarterly where available).
Net margin of 15.23% shows how much revenue becomes profit. The checkup is stronger when margin quality supports EPS growth rather than simply flattering one recent period.
ROIC
PCTY ROIC
18.36%
ROIC tests whether the business earns enough on reinvested capital to deserve attention. Q4 FY2026 (2026-06-30): 18.36%.
+20.5pp over 10Y
tgmcharts.com
Latest ROIC: 18.36%.
ROIC of 18.36% is the reinvestment-quality check. A business with stronger returns can support a better long-term read even when the valuation is not obviously cheap.
A strong growth profile can be undermined if a business relies on excessive leverage or suffers from tight liquidity. The company's balance sheet exhibits a highly conservative structure, characterized by a debt-to-equity ratio of 0.10x. Supported by a current ratio of 1.09x, the organization possesses ample near-term liquidity to navigate macroeconomic shifts without compromising its long-term strategic investments.
debt-to-equity
PCTY debt-to-equity Chart
0.10x
Debt-to-equity keeps the checkup honest about balance-sheet flexibility. Historical series through 2026-06-30.
-37.50% over 5Y
tgmcharts.com
Latest debt-to-equity ratio: 0.10x.
Debt-to-equity of 0.10x and current ratio of 1.09x are the balance-sheet checks. They matter because growth and margins are less valuable if financial flexibility is narrowing.
Current Multiples Set High Expectations For Execution
The market currently prices the business at a trailing price-to-earnings ratio of 29.04x, which corresponds to an earnings yield of 3.44%. This multiple indicates that investors are already discounting a significant level of future growth. Notably, the current market price of $143 remains below the third-party analyst DCF (FMP) reference value, suggesting a statistical margin of safety despite the premium valuation multiple.
The close at $143 is not the conclusion, but it is the market reference point. The fundamental read has to explain whether growth, margins, and balance-sheet support justify the price investors are paying.
Assessing The Reinvestment Thesis Against Execution Risks
The primary positive argument for the business is that its high-margin growth is fully supported by exceptional cash conversion and a debt-free balance sheet, allowing for unconstrained product development. Conversely, the main risk to this thesis is the premium valuation multiple; any deceleration in top-line growth below historical averages could lead to significant multiple contraction, even if cash generation remains structurally sound.
Bull and bear case
Fundamental support
Five-year revenue CAGR of 22.75% and five-year EPS CAGR of 30.87% support the business case.
Net margin of 15.23% and ROIC of 18.36% are the quality checks behind the thesis.
Fundamental pressure
Free-cash-flow CAGR of 38.86% can weaken the read if it falls away from EPS growth.
Debt-to-equity of 0.10x and current ratio of 1.09x are the balance-sheet checks that can change the view.
In conclusion, the fundamental profile of the business is characterized by high growth, strong capital efficiency, and a pristine balance sheet. This positive outlook would require revision if future quarterly updates show a persistent decline in the ROIC of 18.36% or if free cash flow growth begins to lag net income. This analysis is intended for institutional research purposes and does not constitute personalized investment advice.
FAQ
What is the fundamental read on PCTY?
Paylocity Holding Corporation is judged through revenue growth of 22.75%, EPS growth of 30.87%, free-cash-flow growth of 38.86%, net margin of 15.23%, and ROIC of 18.36%.
Which PCTY fundamental metric matters most?
No single metric carries the article. The checkup requires growth, cash conversion, profitability quality, balance-sheet flexibility, and valuation to be read together.
When should this PCTY checkup refresh?
Its figures are as of September 10, 2026, the note's dated snapshot; a note whose figures stop verifying against reported data is corrected or unpublished.
What would change our mind
Revenue growth moving away from the current five-year CAGR of 22.75%.
Free-cash-flow growth drifting away from five-year EPS CAGR of 30.87%.
ROIC or balance-sheet flexibility weakening from ROIC of 18.36% and debt-to-equity of 0.10x.
The bottom line
Paylocity Holding Corporation fundamental research note from TGMCharts Research, grounded in a dated fundamentals snapshot, chart exhibits, and linked source facts.
Every number in this note comes from data we compute and store ourselves from the company's reported figures, plus verbatim excerpts from its SEC filings. When a value isn't available we say so — we never fill gaps with estimates.
“Recurring and other revenue increased primarily as a result of incremental revenues from new and existing clients due to the strong performance by our sales team and continued annual revenue retention in excess of 92%.”
“Cost of revenues increased primarily as a result of the continued growth of our business, in particular, $26.0 million in additional employee-related costs, $10.7 million in additional processing and delivery related costs, and $10.6 million in increased internal-use software amortization.”
“The increase in year-over-year total revenue growth was driven by the strong performance of our sales team and continued annual revenue retention in excess of 92%.”
“Annual Revenue Retention Rate
Our annual revenue retention rate has been in excess of 92% during each of the past three fiscal years.”
Every numeric or dated claim in this note was checked against our stored company data before publishing — each figure below links to the page it comes from.
