Paylocity Earnings: Firm Stumbles on Upmarket Sales as Employment Growth Decelerates Further

We lower our fair value estimate for narrow-moat Paylocity to $205 per share from $215 following the release of mixed second-quarter results and underwhelming full-year guidance. Paylocity reported reasonable revenue and profitability performance during the quarter, however, decelerating employment growth, poor upmarket sales execution, and macroeconomic pressures have soured the near-term outlook. Following the result, we have lowered our full-year revenue growth forecasts to account for a weaker-than-previously anticipated second half and to align with updated guidance. Despite our tempered outlook, shares continue to screen as attractive relative to our updated valuation.