New York, Feb 6, 2026, 15:04 EST — Regular session
- Paylocity stock slid roughly 7% in afternoon trading, deepening the selloff that followed its earnings report.
- HR and payroll software provider raised its full-year outlook, pointing to robust cash generation.
- Still, analysts trimmed price targets, citing what they describe as lackluster demand hanging over the sector.
Shares of Paylocity Holding Corporation (PCTY) slid 7.2% to $117.88 as of Friday afternoon. The stock bounced between $113.90 and $128.37 during the session.
This isn’t just about a single ticker. Investors tracking payroll and HR software stocks are looking for any signals on hiring trends and paychecks at smaller firms—a sector that, according to policymakers, might shift direction fast if sentiment takes a hit. 1
The timing on the next labour market snapshot is shifting. Thanks to a short-lived government shutdown, the U.S. January jobs report—originally set for release earlier—is now slated for Wednesday, Feb. 11, following a schedule shakeup by the Bureau of Labor Statistics. 2
Paylocity reported recurring and other revenue—primarily from subscription fees—climbed 11.3% to $387.0 million for its fiscal second quarter, pushing total revenue up 10.4% to $416.1 million. CEO Toby Williams said momentum from the company’s “selling season” carried forward, highlighting ongoing investments in AI and automation. Williams also noted free cash flow on the rise, as well as improved adjusted EBITDA margins, which exclude interest, taxes, and certain non-cash charges. 3
Paylocity is looking for third-quarter revenue between $487.0 million and $492.0 million, with adjusted EBITDA targeted at $200.0 million to $204.0 million. Its outlook for fiscal 2026 puts total revenue in a $1.732 billion to $1.742 billion range and adjusted EBITDA at $622.5 million to $630.5 million. These numbers strip out interest income from client funds Paylocity holds temporarily during payroll processing. 4
During the earnings call, Williams described demand as “very stable” throughout the season. CFO Ryan Glenn told analysts the company was more inclined to put some of those recent margin gains toward research and development and sales and marketing, instead of letting the full benefit hit the bottom line. 5
Some on Wall Street weren’t quite swayed. BMO Capital Markets trimmed its price target to $150, down from $185, but left the Outperform rating in place. The firm described the quarter as “good, but not great,” citing weaker-than-expected recurring growth and broader signs of industry slowdown. 6
But here’s the thing: the outlook for the sector hangs on hiring staying strong. Markets are already twitchy about upticks in layoff chatter and changing bets on rate cuts—both of which could swing the interest Paylocity makes on client funds. 7
Paylocity goes up against heavyweight payroll names like ADP and Paychex, as well as HR software rivals like Paycom. High switching costs define the market, but when jobs growth cools, budgets can shrink quickly.
