Paylocity Holding Corporation

Paylocity reported fourth-quarter fiscal 2026 non-GAAP net income of $1.84 per share, beating the Zacks Consensus Estimate by 19.48% and rising 17.9% year over year. Total revenues increased 11% to $444.7 million, surpassing estimates by 3.18%, driven by a 12.4% increase in recurring and other revenues to $415.6 million, which accounted for roughly 93% of total revenues. Interest income on funds held for clients, about 7% of total revenues, declined 5.6% to $29.1 million. Adjusted EBITDA rose 11.3% to $145.5 million, and the company provided fiscal 2027 total revenue guidance of $1.88 billion to $1.895 billion, implying approximately 7% growth.

HireQuotient announced an integration with Paylocity that brings AI-powered candidate sourcing and screening to Paylocity customers in manufacturing, building services, construction, healthcare, and insurance. The integration embeds HireQuotient's EasySource platform directly into the Paylocity ecosystem, enabling employers to source, screen, and personalize outreach while staying within Paylocity. For mid-market companies with 500 to 1,000 employees, the partnership delivers a 70% faster time-to-hire and an estimated $100,000 in annual savings. The move addresses a gap in AI recruiting tools for deskless and frontline hiring, where recruiters often spend more than two-thirds of their time on manual work across over 10 platforms. HireQuotient founder and CEO Smarthveer Sidana noted that being named to Paylocity's elite partner network validates the product's strength and helps Paylocity capture revenue and reduce client churn.

Paylocity, Rapid7, and Braze shares surged in afternoon trading as investors rotated into oversold enterprise software names while taking profits in semiconductor stocks. Paylocity jumped 5.4%, Rapid7 gained 5.8%, and Braze climbed 5.6%. The broader move saw ServiceNow rise 4.3% and Salesforce add 2.4%, even as the Nasdaq retreated and Micron fell 4%. The shift reflects growing confidence that software companies can monetize artificial intelligence through premium add-ons, with ServiceNow raising its AI contract target to $1.5 billion and Salesforce scaling its Agentforce platform. Rapid7 remains down 16.4% year-to-date and trades 47.8% below its 52-week high of $22.86.

Zacks Investment Research highlights Datadog, Alphabet, Shopify, and Paylocity Holding as top-ranked internet stocks with solid upside potential for the rest of 2026, driven by accelerating enterprise AI adoption. Datadog, a Zacks Rank #1 Strong Buy, guided full-year 2026 revenues of $4.30 to $4.34 billion and launched over 100 new capabilities including a fully autonomous Bits AI suite. Alphabet, a Zacks Rank #2 Buy, upsized its equity raise to $84.75 billion for AI infrastructure and guided 2026 capex at $180 to $190 billion, while Google Cloud's backlog exceeded $460 billion. Shopify, also a Zacks Rank #2 Buy, expects high-twenties revenue growth in the second quarter and raised its share repurchase authorization to $5 billion. Paylocity Holding, another Zacks Rank #2 Buy, launched Paylocity Retirement and acquired Grayscale Labs, with fourth-quarter recurring revenue growth guided at approximately 9 to 10 percent year over year.

Zacks Investment Research recommends three human capital management software stocks with strong short-term upside potential: Paycom Software, Paylocity Holding, and First Advantage. Paycom Software, carrying a Zacks Rank #1 (Strong Buy), is expected to grow earnings 15.4% this year, with a consensus price target implying a 22.1% upside from its last close of $124.48. Paylocity Holding, also a Zacks Rank #1, has a price target suggesting a 54.5% increase from $100.48, with no downside risk. First Advantage, a Zacks Rank #2 (Buy), is projected to grow earnings 18.3% this year, and its price target indicates an 8.2% rise from $16.76, also with no downside.

Paylocity reported the strongest results among HR software peers in the first quarter, with revenues of $502.3 million beating analyst estimates by 2.6% and full-year EBITDA guidance raised above expectations. The company's recurring revenue grew 11.6% year on year, and it announced the acquisition of AI-powered recruiting automation firm Grayscale. Paychex posted revenues of $1.81 billion, up 19.9% and exceeding estimates by 1.5%, while Asure Software's $42.76 million in revenue, a 22.7% increase, was overshadowed by next-quarter EBITDA guidance that significantly missed expectations. Paycom's revenues rose 7.8% to $571.8 million, meeting full-year guidance but delivering the slowest growth and weakest performance against estimates among the group. Despite the mixed results, the four HR software stocks collectively saw average share prices decline 2.4% since reporting.