Paylocity (PCTY) · Q2 2026 results and valuation

At 14.7% growth a year (3-year revenue growth), the model's fair value is $317.88 a share — the stock trades 43% below it. Today's price assumes 6.8% growth a year.

1. Guidance ↑

   The company may exceed and raise its revenue guidance if its current performance continues.

   Source quote

   “And our hope and expectation would be if we continue to see that strong performance, we would be able to exceed our guidance and raise the guidance, both from a revenue...”

2. Fading

   Adjusted gross profit was 77.3% for Q3, an increase of 30 basis points from Q3 of last fiscal year, resulting in a race for fiscal year guidance.

   Source quote

   “Our adjusted gross profit was 77.3% for Q3, an increase of 30 basis points from Q3 of last fiscal year... ...primarily driven by another solid quarter for our sales and operations team, allowing us to come in $10.3 million above the top end of our total revenue guidance and resulting in a race for our fiscal year guidance by more than our quarterly beat for the third consecutive quarter this year.”

Script and answers carried a similar tone, so the script's message held up under questioning.

Sentences that drove the tone

“Our strong culture, industry-leading software innovation, and exceptional sales and operational execution would not be possible without the dedication and commitment of our employees.”

“Additionally, we continue to show strong growth on free cash flow with fiscal '26 free cash flow margin of 24.2%, representing an increase of 24.8% on a dollar basis from...”

“So I think we're in a position with strong cash flows, increasing profitability where we can reduce share count while also investing for future growth.”