According to a MarketsandMarkets report, the global Human Capital Management (HCM) market is expected to grow from $17.6 billion in 2020 to $24.3 billion by 2025 at a CAGR of 6.7%. Paylocity (Nasdaq: PCTY) recently announced its quarterly results that continued to surpass market expectations.
For the third quarter, Paylocity’s revenues grew 23% over the year to $172 million, ahead of the Street’s forecast of $166 million. Recurring revenues grew 25% to $167.1 million. Adjusted EPS of $0.83 grew from $0.60 recorded last year and was also ahead of the market’s forecast of $0.71 for the quarter.
For the fourth quarter, Paylocity expects revenues of $121-$131 million, ahead of the Street’s forecast of $136.99 million. It expects to end the year with revenues of $551.7-$561.7 million, compared with the Street’s estimate of $561.58 million. The company lowered its guidance for the year from its previous estimates of $572.5-$573.5 million.
During the quarter, Paylocity announced the acquisition of VidGrid, a video platform service provider, for an undisclosed sum. Minnesota-based VidGrid was set up in 2012 by Nik Stokman, to build a video platform that offered two-way, peer-to-peer learning courses. Prior to the acquisition, VidGrid was privately held. It had only raised a pre seed round and did not disclose its funding or financial details.
Through its earlier engagement with VidGrid, Paylocity has built a video-enabled learning management system. With the remote working conditions expected to continue for longer, Paylocity expects demand for video-based training courses to grow. Video will also play an even more critical role in workplace communication and for HR teams to drive engagement and connections among workforces.
The acquisition will help Paylocity expand its product offering around the video communication workplace and will help it build a stronger employee collaboration, engagement and retention offering for the remote working environment.
Paylocity’s Product Upgrades
Besides acquisitions, Paylocity continued to deliver several product upgrades to help customers deal with the COVID-19 pandemic for the automation of the IRS Form 7200 to advance payment of employer credits, along with product mobilization.
According to current regulations, employers may file a new IRS Form 7200, Advance Payment of Employer Credits, and receive advances of tax credits earned under the Coronavirus Aid, Relief and Economic Security (CARES) Act and the Families First Coronavirus Response Act (FFCRA). To help organizations meet these requirements, Paylocity launched enhancements to automatically complete and file Form 7200 for these clients.
It also launched a Form 7200 microkit that provides guidance and information on COVID-related support and automation. It has also deployed several other microkits to provide easy access to expert content on the CARES Act and FFCRA and its latest product enhancements.
Its stock is currently trading at $142.96 with a market capitalization of $7.7 billion. It touched a 52-week high of $150.73 in February this year. The stock hit a 52-week low of $66.98 in March this year.
This segment is a part in the series : Cloud Stocks