you for joining us on our fourth quarter and fiscal 2025 earnings call. Our differentiated value proposition of providing the most modern platform in the industry continues to resonate in the marketplace and helped drive recurring revenue growth of 14% and total revenue growth of 12%. In Q4 for fiscal 2025, recurring revenue growth grew 15% and total revenue grew 14% as we ended the year with $1.6 billion of revenue. We believe Paylocity for Finance represents a significant multi-year opportunity for both new clients and a cross-sale back into our 41,650 existing client base, which grew 7% from fiscal 2024.
Our commitment to product development also continues to be recognized in the market, with Paylocity recently winning a TrustRadius Top Rated Award in HR management software for the third year in a row. We are pleased to be fully staffed to begin fiscal 2026, and we continue to successfully attract the best sales talent in the industry, positioning us well for durable recurring revenue growth. Revenue retention also remained consistent at greater than 92% in fiscal 2025, and we remain committed to investing in our operations teams to deliver world-class service to our clients. 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.
I would now like to pass the call to Ryan to review the financial results in greater detail and provide an initial outlook on fiscal 2026. Recurring revenue for the fourth quarter was $369.9 million, an increase of 14% with total revenue up 12% from the same period last year. Adjusted EBITDA for the fourth quarter was $130.7 million, or 32.6% margin, and exceeded the top end of our guidance by $8 million. Adjusted EBITDA margin for fiscal 2025 was 31.2%, reflecting operating leverage of 120 basis points versus fiscal 2024 and approximately 220 basis points of organic operating leverage when excluding the impact of Airbase.
| Metric | Period | Current guidance |
|---|---|---|
| Recurring and other revenue | Q1 FY2026 | $370M–$375M (~12% growth) (New) |
| Total revenue | Q1 FY2026 | $397.5M–$402.5M (~10% growth) (New) |
| Adjusted EBITDA | Q1 FY2026 | $131M–$135M (New) |
| Adjusted EBITDA excluding interest income on funds held for clients | Q1 FY2026 | $103.5M–$107.5M (New) |
| Recurring and other revenue | FY2026 | $1.597B–$1.612B (~9% growth) (New) |
| Total revenue | FY2026 | $1.707B–$1.722B (~8% growth) (New) |
| Adjusted EBITDA | FY2026 | $608.5M–$618.5M (New) |
| Adjusted EBITDA excluding interest income on funds held for clients | FY2026 | $498.5M–$508.5M (~20 bps leverage at midpoint) (New) |
| Interest income on funds held for clients | Q1 FY2026 | ~$27.5M (avg daily balance ~$2.85B, ~390 bps yield) (New) |
| Interest income on funds held for clients | FY2026 | ~$110M (avg daily balance $3.15B, ~350 bps yield) (New) |
| Metric | YoY | Note |
|---|---|---|
| Recurring revenue | +14% (Q4); +15% on a Q4 basis | Strong sales execution plus durable demand, with the majority of the Q4 revenue beat coming from recurring and other revenue. |
| Total revenue | +12% (Q4) | Continued product differentiation and expansion of average revenue per client driven by sustained multi-year R&D investment. |
| Adjusted EBITDA (FY2025) | +15% on a dollar basis | Operating leverage of 120 basis points, or approximately 220 basis points of organic leverage excluding Airbase. |
| Average revenue per client | +8% (to ~$35,300) | Product suite expansion and continued cross-sale of HCM modules into the existing client base. |
| Client count | +7% (to 41,650) | Continued new client additions with a normalizing customer growth rate near pre-pandemic levels. |
| Free cash flow (FY2025) | +19% on a dollar basis; ~21.5% margin | Profitability gains despite full cash taxpayer status, lower interest rates, and Airbase headwinds. |
| Total R&D investment (expensed plus capitalized) | +14% on a dollar basis (14.3% of revenue) | Continued investment to maintain product differentiation as the most modern platform in the industry. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Paylocity for Finance / Airbase integration | — | First integration phase completed and product launched into the office of the CFO; early adopter feedback positive but still very early days | Rising |
| Product expansion driving ARPU | $32,800 ARPU in FY2024 | ARPU just over $35,300 in FY2025; modules targeted at 10%-20% penetration over time | Rising |
| Broker channel strength | More than 25% of new business in prior years | Again more than 25% of new business in FY2025, with a non-competing value proposition | Steady |
| AI capabilities | Policy answering assistant / chatbot referenced last quarter | AI increasingly raised by prospects and embedded across modules; still early innings for internal operations efficiency | Rising |
| Demand environment | Some noise noted in the last week of April last quarter | Fairly steady and healthy demand environment through FY2025 and Q4, baked into FY2026 guidance | Steady |
| Sales headcount and productivity | ~8% headcount growth coming into FY2025 | Sales force expanded 8% to 952 reps; fully staffed entering FY2026 with continued productivity focus | Steady |