Paylocity Holding Corporation (PCTY): Business Model Canvas [Dec-2025 Updated]

You're looking to cut through the noise and see exactly how Paylocity Holding Corporation makes its money, especially now that the FY 2025 books are closed. As someone who's spent two decades in the weeds of financial analysis, I can tell you their model is built squarely on serving the mid-market-those 50 to 1,000-employee companies-with a unified Human Capital Management platform. The numbers from FY 2025 are telling: they pulled in $1,471.8 million in recurring subscription revenue while keeping client retention above 92%, all fueled by a $282 million investment in R&D to keep their tech modern. Dig into the canvas below to see how their key partnerships and platform expansion are driving this growth.

Paylocity Holding Corporation (PCTY) - Canvas Business Model: Key Partnerships

You're looking at how Paylocity Holding Corporation builds value through its external relationships, which is crucial for scaling a SaaS platform like this. These aren't just vendors; they are channels for growth and extensions of the platform's capability, especially as Paylocity Holding Corporation pushes further into the finance function with its newer offerings.

Referral Network and Channel Performance

The referral network, primarily composed of benefit brokers and financial advisors, remains a significant engine for new client acquisition. This channel thrives because Paylocity Holding Corporation avoids competing directly with these partners' core services, which is a smart move to keep them engaged. For the third quarter of fiscal year 2025, which ended March 31, 2025, this channel was highly effective.

• Referrals represented more than 25% of new business for Q3 FY2025.
• Partners are incentivized by the strength of Paylocity Holding Corporation's products and the dedicated broker portal.

This reliance on the channel is noted as a risk factor, meaning the health and continued support from these third parties directly impact new client Annual Recurring Revenue (ARR).

Banking and Financial Processing Alliances

For processing payroll and managing the funds that move between clients and employees, strong banking relationships are non-negotiable. Paylocity Holding Corporation has established relationships to manage client funds-in-transit efficiently and compliantly. One key partner in this space is Wells Fargo & Company.

Partner Type	Specific Entity Mentioned	Contextual Financial Scale (Partner)	Service Focus
Banking Partner	Wells Fargo & Company	$1.8 trillion in assets	Developing customized services for global cash picture control

These banking ties help Paylocity Holding Corporation offer integrated treasury management, allowing for central receipt, holding, and disbursement of foreign funds in multiple currencies, which is key for their larger clients.

Marketplace Integration Partners

The Marketplace strategy is about making the core Human Capital Management (HCM) platform more valuable by connecting it to specialized tools. This is where Paylocity Holding Corporation extends its reach into adjacent functions like Accounting, Expense Management, and Recruiting. The recent launch of Paylocity for Finance highlights deeper integration needs.

The platform is built to integrate with top Enterprise Resource Planning (ERP) and general ledger systems, ensuring data flows seamlessly and reduces manual entry for clients. These are critical integration partners:

• NetSuite
• QuickBooks
• MS Dynamics
• Sage Intacct

Furthermore, the integration of Airbase, recognized in the 2025 Gartner Magic Quadrant for Accounts Payable Invoice Automation, shows a strategic move to partner with best-of-breed solutions in the spend management area.

Strategic Brand Visibility Sponsorships

To build brand awareness and associate Paylocity Holding Corporation with performance and innovation, strategic sponsorships are utilized. A notable recent example is the multi-year partnership announced in October 2025 with the Vegas Golden Knights of the NHL, naming Paylocity Holding Corporation as the team's Official Human Capital Management (HCM) Partner.

While the direct cost of the sponsorship isn't public, the scale of the partner provides context for the brand exposure. For instance, the Vegas Golden Knights' Total Cap Allocation for the 2025-26 season was approximately $107.6 million.

International Payroll Third-Party Partners (Blue Marble)

For international payroll, Paylocity Holding Corporation relies on its acquired entity, Blue Marble Payroll, which in turn leverages a network of in-country partners. This structure allows Paylocity Holding Corporation to offer compliance and payroll processing across a vast global footprint without needing to establish local entities everywhere itself.

The Blue Marble platform, WebGlobe®, simplifies managing international payroll across more than 150 countries. At the time of acquisition, Blue Marble served approximately 450 clients, and Paylocity Holding Corporation now offers integrated global payroll across 100+ countries through this network. This structure is explicitly mentioned as a reliance on third-party payroll partners in foreign jurisdictions.

Finance: draft Q2 2026 cash flow projection by next Tuesday.

Paylocity Holding Corporation (PCTY) - Canvas Business Model: Key Activities

You're building a modern workforce platform, so your key activities center on continuous product evolution and scaling your service delivery to a growing client base. This is where the heavy lifting happens to maintain that sticky, subscription-like revenue stream.

The core activity remains the development and maintenance of the cloud-based Human Capital Management (HCM) software. This isn't just about keeping the lights on; it's about expanding the platform's reach beyond traditional HR functions. This commitment to innovation is quantified by the investment made in Research and Development (R&D) during the fiscal year ending June 30, 2025.

Paylocity Holding Corporation invested $282 million in Research and Development (R&D) for fiscal year 2025. Here's the quick math: that spend represented 18% of the company's total revenue for the year, which was $1,595.2 million. This defintely shows a strong focus on future product leadership over mere maintenance.

Another critical, high-volume activity is the processing of payroll and managing tax compliance for the entire client base. As of June 30, 2025, Paylocity Holding Corporation supported approximately 41,650 clients. This scale requires robust, reliable operational execution, which is supported by the fact that the client base grew by 7% during fiscal year 2025.

Sales and marketing activities are heavily focused on expanding the Average Revenue Per Client (ARPC) through cross-selling modules across the suite. The strategy centers on upselling the broader offering to the existing base, which is a key driver of growth. The referral network, for example, contributed over 25% of the new-client Annual Recurring Revenue in FY2025.

Integrating acquired technologies is a major activity, expanding the total addressable market beyond HCM and into the Office of the CFO. The acquisition of Airbase Inc., a spend management software solution, was completed in fiscal 2025. This integration is designed to unify payroll and non-payroll spend management onto a single platform.

This platform expansion was formalized with the launch of Paylocity for Finance in fiscal year 2025. This move directly addresses the need for integrated financial controls alongside HR data. The platform now spans payroll, HR, time & labor, talent, benefits, and these new finance modules.

Here are some key operational and financial metrics that underpin these activities for the fiscal year 2025:

Metric	Amount/Value
FY 2025 Total Revenue	$1,595.2 million
FY 2025 Recurring & Other Revenue	$1,471.8 million
FY 2025 Client Base Increase	7%
FY 2025 R&D Spend	$282 million
FY 2025 Client Count (as of June 30, 2025)	~41,650
FY 2025 Annual Revenue Retention	>92%

The ongoing development also includes incorporating AI-driven analytics, such as the Modern Workforce Index, and maintaining over 700 marketplace integrations to deepen client lock-in. These activities support the sticky economics, as evidenced by the Annual Revenue Retention staying above 92% for three straight years through FY2025.

• Cloud-based HCM software development and maintenance
• Processing payroll and managing tax compliance
• Research and Development (R&D) investment of $282 million
• Sales and marketing driving ARPC expansion
• Integrating Airbase for spend management capabilities
• Launching Paylocity for Finance

If onboarding takes 14+ days, churn risk rises. Finance: draft 13-week cash view by Friday.

Paylocity Holding Corporation (PCTY) - Canvas Business Model: Key Resources

You're looking at the core assets that let Paylocity Holding Corporation actually run its business and keep growing. These aren't just line items on a balance sheet; they are the engines driving that double-digit revenue growth you see in their filings. Honestly, for a SaaS company, the people and the code are everything.

The foundation is definitely the proprietary, cloud-based HCM and payroll software platform. This isn't off-the-shelf stuff; it's a unified system that now stretches from core HR and payroll into spend management, with newer modules like AP automation and corporate cards. They are actively investing here, evidenced by their Research & Development (R&D) spend in fiscal year 2025 hitting $282 million, which was 18% of their total revenue for the year.

That platform is built and maintained by a significant human capital investment. The highly-skilled software development and product engineering workforce is substantial. As of June 30, 2025, Paylocity Holding Corporation's total employee count stood at 6,700. That's a lot of talent dedicated to keeping the tech modern and scalable.

Here's a quick look at the scale of the human and client resources supporting the platform as of the end of fiscal year 2025:

Resource Metric	Value (FY 2025 End)	Context/Detail
Total Employees	6,700	Workforce primarily located in the United States.
Client Count (Excl. Acquisitions)	~41,650	Clients across the U.S.
Average Employees per Client	~150	Reflects focus on the mid-market segment.
Annual Revenue Retention	>92%	Sticky, subscription-like economics maintained for three straight years.
R&D Investment	$282 million	Represents 18% of total revenue for the fiscal year.

Another critical, though less tangible, resource is the strong brand reputation for ease of use and customer support. You can see this reflected in the numbers; maintaining an annual revenue retention rate above 92% for three consecutive years (FY 2023-2025) shows clients aren't leaving for competitors easily. Plus, their total revenue for FY 2025 was $1,595.2 million, with recurring and other revenue making up $1,471.8 million of that.

The business model also relies on managing client funds held for payroll and tax payments, generating interest income. Paylocity collects these funds before remitting them to payees, earning interest on the float through demand deposit accounts and investments in highly liquid, investment-grade marketable securities. While the exact dollar amount of the float isn't explicitly stated as a balance sheet line item here, its impact is clear when you look at profitability metrics. For instance, their Adjusted EBITDA excluding this interest income for FY 2025 was $459.6 million. This separation highlights the distinct, non-software-related financial benefit derived from their core payroll processing function.

Finally, the intellectual property and patents protecting the platform's features form a barrier to entry. While the specific number of granted patents isn't public in these summaries, the company acknowledges that its success depends on not infringing on others' rights, and they have active patent applications related to computer architecture for resource utilization and data system configurations. This IP underpins the differentiation that drives their growth.

Finance: Calculate the implied interest income for FY 2025 by comparing total Adjusted EBITDA ($583.0 million) to the adjusted figure excluding interest income ($459.6 million) and report the difference by Monday.

Paylocity Holding Corporation (PCTY) - Canvas Business Model: Value Propositions

You're looking to understand what makes Paylocity Holding Corporation's offering compelling to its clients as of late 2025. The value proposition centers on deep integration, modern user experience, and data-driven decision-making.

Unified platform for HR, Payroll, and Finance (Paylocity for Finance)

Paylocity Holding Corporation strategically expanded its modern workforce platform into the Office of the CFO with the launch of Paylocity for Finance in August 2025. This move unifies finance and HR teams through a single system grounded in the employee record, aiming to eliminate disconnected systems and manual processes. This integration is supported by the fact that HCM is increasingly viewed as the foundation for Unified Business Operations, according to Forrester's 2025 Human Capital Management Solutions Landscape report. The platform is designed to integrate with major ERP systems, such as NetSuite, QuickBooks, MS Dynamics, and Sage Intacct, to deliver real-time financial data and simplify accounting reconciliation. The integration of Airbase, recognized as a Visionary in the 2025 Gartner Magic Quadrant for Accounts Payable Invoice Automation, underpins the spend management capabilities.

The core value here is managing both payroll and non-payroll spend in one system. Here are the five core modules introduced with Paylocity for Finance:

Module	Key Feature/Benefit
AP Automation	Streamlines invoice processing and vendor payments in over 200 countries with automated workflows.
Expense Management	Delivers a single solution with artificial intelligence-powered, touchless expense reports, now the standard for new clients.
Corporate Cards	Enables issuance of virtual or physical cards with built-in controls and real-time tracking.
Guided Procurement	Centralizes purchase request workflows.
Headcount Planning	Supports strategic workforce planning.

Modern, mobile-first design focused on employee engagement and experience

The platform emphasizes a modern design to drive user adoption and employee experience. You can expect a fully integrated mobile version of the Paylocity for Finance experience to be available in Fall 2025, extending the mobile-first approach across the expanded suite. Managers benefit from a single, centralized task list for all approvals, whether for time off, expenses, or purchases, which helps them stay on top of workflows.

Comprehensive suite: payroll, benefits, talent, time & labor, and spend management

Paylocity Holding Corporation offers a broad suite built around the employee record. The platform spans the core HCM functions plus the new financial tools. This breadth is intended to capture more of the client's total spend on HR and finance technology.

• Payroll
• Benefits Administration
• Talent Management
• Time & Labor Management
• Spend Management (via Paylocity for Finance)

Dedicated support teams and high annual revenue retention (>92% for FY2025)

Client stickiness is a major value driver, supported by dedicated service. The company has achieved annual revenue retention exceeding 92% for three consecutive fiscal years, including FY-25. This high retention signals strong client satisfaction with the software and the accompanying implementation and support services. The company supplements its software with integrated implementation and leading customer service.

Here are some key financial and operational metrics from the end of fiscal 2025:

Metric	FY 2025 Value
Total Revenue	$1.60 bn
Annual Revenue Retention	>92%
Client Count (Approximate)	$\approx$41,650
R&D Expense	$281.7 million
Free Cash Flow Margin	21.5%

Actionable AI-driven workforce insights (e.g., Modern Workforce Index)

The platform embeds AI throughout to deliver intelligent automation and tailored insights. The Modern Workforce Index (MWI) is a proprietary dashboard built on this AI, which benchmarks a company against similar organizations across Paylocity Holding Corporation's client base, which numbered $\approx$41,650 clients at the end of FY25. The MWI provides prescriptive recommendations. For example, research shows that companies with higher MWI scores experience 15-25% lower attrition. The AI Assistant helps streamline getting information, allowing you to analyze trends, plan for changes using position-level data, and optimize financial decisions by seeing spend by department or vendor.

The data science team supporting this is dedicated, with over 20+ data scientists and engineers focused on making sophisticated AI accessible.

Finance: draft 13-week cash view by Friday.

Paylocity Holding Corporation (PCTY) - Canvas Business Model: Customer Relationships

Dedicated support is central to Paylocity Holding Corporation's strategy, aiming to secure high revenue retention. The company reported a revenue retention rate greater than 92% for fiscal year 2025. Each client gets an account management team serving as the main contact for support and service needs, which is intended to provide knowledgeable resources accountable for the overall client experience. As of June 30, 2025, Paylocity Holding Corporation provided its solutions to approximately 41,650 clients, excluding those acquired through acquisitions.

The sales process for new mid-market client acquisition is high-touch, relying on a direct sales force. The company actively grew its sales capacity to support this, with 885 sales representatives in fiscal 2025, marking an 8% increase from 820 in fiscal 2024. Furthermore, benefit brokers accounted for more than 25% of new business, and over 25% of new client revenue derived from referral channels, showing the importance of partner ecosystems. The average revenue per client increased by approximately 8% in fiscal 2025, reaching just over $35,300, up from $32,800 in fiscal 2024, driven by client base expansion and upselling.

Metric	Fiscal 2024 Value	Fiscal 2025 Value	Change/Notes
Revenue Retention Rate	Greater than 92%	Greater than 92%	Consistent performance.
Client Base (Excl. Acquisitions)	~39,000 (as of 6/30/2024)	Approximately 41,650	7% client base growth in FY2025.
Sales Representatives Headcount	820	885	8% increase in sales force.
Average Revenue Per Client (ARPC)	$32,800	Just over $35,300	Approximately 8% increase.
New Client Revenue from Referrals	Not specified	Over 25%	Indicates strong client satisfaction/advocacy.

Employee and manager autonomy is supported through self-service capabilities, which is key for a platform focused on the mid-market. Workers use mobile apps on Google, iOS, and Android platforms for time clock functions, and managers can monitor hours and location data. The platform includes employee self-service features and PTO tracking to improve the overall employee experience. The Fall 2025 mobile launch of Paylocity for Finance is expected to further boost autonomy by bringing finance workflows to mobile users.

Product evolution is continuous, heavily influenced by client needs, especially with the expansion into finance workflows. The launch of Paylocity for Finance unifies HR and finance teams on a single employee record system, creating cross-sell opportunities back into the existing 41,650 client base. The company's total Research and Development (R&D) investment in fiscal 2025 was 14.3% of revenue on a non-GAAP basis. Recent updates include new guides for pay setup and punch imports to smooth integration workflows, and API enhancements for the Assessments and Background Check services.

• Generative AI functionality and a growing number of autonomous agents are being delivered across the platform.
• The company is focused on connecting day-to-day spend management with strategic workforce planning via the new finance module.
• New API endpoints were added to the Assessments API to retrieve assessment orders, filterable by company ID, order ID, candidate ID, or creation date.
• The Background Check API gained a new endpoint to Get Screening Orders for Partner.

Paylocity Holding Corporation (PCTY) - Canvas Business Model: Channels

You're looking at how Paylocity Holding Corporation gets its software solutions into the hands of mid-market companies. The channel strategy is clearly multi-pronged, blending direct effort with partner influence and digital reach.

Direct sales force targeting mid-market companies

The core of the acquisition engine is the direct sales force, which focuses squarely on that $\mathbf{10-5,000}$ employee segment, representing a realized Total Addressable Market (TAM) of $\mathbf{\$22}$ billion for Paylocity Holding Corporation. You saw solid execution here in fiscal year 2025, with the client base growing $\mathbf{7\%}$ to reach approximately $\mathbf{41,650}$ clients as of June 30, 2025. The investment in this channel is significant; Sales & Marketing operating expenses for the full fiscal year 2025 were $\mathbf{21\%}$ of total revenue.

To maintain momentum, Paylocity Holding Corporation staffed up its direct team. Coming into fiscal year 2026, the company expanded its sales force by $\mathbf{8\%}$ to $\mathbf{952}$ sales reps, aiming for durable recurring revenue growth.

Here's a quick look at the direct sales capacity and channel contribution:

Metric	FY 2025 / Entering FY 2026	Value
Total Clients (as of 6/30/2025)	FY 2025 End	41,650
Sales Representatives (Entering FY 2026)	FY 2026 Start	952
Sales & Marketing as % of Revenue (FY 2025)	FY 2025	21%
Average Revenue Per Client (ARPC) (FY 2025)	FY 2025 End	Just over $35,300

Indirect channel via the strong referral network of brokers and CPAs

The indirect channel is a major contributor, showing the value of trusted third-party endorsements. Benefit brokers, specifically, were a powerhouse for Paylocity Holding Corporation in the last fiscal year. Honestly, this is a classic SaaS play-using trusted advisors to shorten the sales cycle.

• Benefit brokers represented more than 25% of new business in fiscal year 2025.
• The overall referral network contributed over 25% of fiscal year 2025 new revenue.

Paylocity Marketplace for third-party application integrations

The Marketplace is where Paylocity Holding Corporation extends its platform functionality without building everything in-house. This ecosystem approach makes the core platform stickier. You see this strategy supporting the platform's expansion into the Office of the CFO with the launch of Paylocity for Finance, which integrates spend management capabilities.

Recent additions to the Marketplace in June 2025 highlight this focus on connecting critical workflows:

• New integrations with QuickBooks Online and NetSuite for direct General Ledger connection.
• The addition of Tracks to simplify scheduling and time tracking processes.
• Integration of American Medical Compliance training materials directly into the Learning Management System module.

Company website and digital marketing for lead generation

While specific digital marketing spend figures aren't broken out separately from the $\mathbf{21\%}$ Sales & Marketing opex, the company's consistent double-digit revenue growth suggests effective top-of-funnel activity driven by its digital presence. The focus is on showcasing a modern platform that resonates against legacy providers like ADP and Paychex, which are noted as key sources of new clients.

Mobile application for employee and manager access on the go

The mobile application is a key component for driving employee engagement and adoption, which directly supports the high Annual Revenue Retention Rate, which has remained above $\mathbf{92\%}$ for fiscal years 2023 through 2025.

• Enables employee self-service features.
• Allows managers to handle approvals and time/labor tasks remotely.
• Supports the overall goal of a unified, modern workforce platform.

If onboarding takes 14+ days, churn risk rises, so the ease of use provided by the mobile app is defintely a factor in maintaining that high retention.

Paylocity Holding Corporation (PCTY) - Canvas Business Model: Customer Segments

You're looking at the core market Paylocity Holding Corporation targets with its unified platform. The focus is squarely on the U.S. mid-market, which is a massive, underserved space hungry for modern software that connects HR and Finance.

The current client base, as of June 30, 2025 (excluding acquisitions), stands at approximately 41,650 U.S. clients. These clients aren't small shops; they average over 150 employees each. This average size places them firmly in the mid-market sweet spot, though their total addressable market (TAM) stretches from businesses with 10 employees up to 5,000 employees. The realized TAM is estimated at about $22.0 billion across roughly 1.3 million U.S. businesses in that 10 to 5,000 employee range. This means Paylocity Holding Corporation has captured about 3% penetration of that specific segment as of fiscal year 2025.

Client retention metrics show the stickiness of this segment. Annual revenue retention exceeded 92% for fiscal years 2023, 2024, and 2025. Furthermore, the quality of the client acquisition strategy is evident: over 25% of the new client Annual Recurring Revenue (ARR) in fiscal year 2025 came from referral channels.

The customer base is diverse, but certain industries show high adoption. Paylocity Holding Corporation is seeing significant usage in sectors like Education, Retail, and Professional Services. Specific counts for payroll-and-benefits usage show Education leading with 273 companies, followed by Marketing with 154, and Manufacturing with 144.

Here's a quick look at the scale and growth within the customer base as of the end of fiscal year 2025:

Metric	Value as of June 30, 2025	Context/Comparison
Total U.S. Clients (Ex-Acq)	41,650	Client base grew by 7% in FY 2025
Average Employees Per Client	Over 150	Targeting the mid-market
Total Addressable Market (Businesses)	Approx. 1.3 million (10-5,000 employees)	Realized TAM estimated at $22.0 billion
FY 2025 Annual Revenue Retention	Over 92%	Indicates strong client stickiness
FY 2025 New Client ARR from Referrals	Over 25%	Validation of partner ecosystem effectiveness

A key evolution in the customer segment strategy involves expanding beyond core Human Capital Management (HCM) and payroll to capture the Office of the CFO. The launch of Paylocity for Finance directly targets this group. This move aims to unify HR and Finance data through a single system of record, which is critical for companies looking to streamline spend management functions like AP automation and corporate cards. This expansion broadens the value proposition for existing clients and opens a new, high-value segment within the existing mid-market structure.

The ideal customer profile prioritizes modern, integrated software experiences. You see this reflected in the product strategy, which emphasizes an intuitive, easy-to-use suite. Companies are looking to move away from legacy systems that require significant manual effort for tasks like time and labor management, talent acquisition, and benefits administration. The platform's ability to connect these critical workflows is what drives adoption across teams, which is essential for maintaining that high revenue retention rate. If onboarding takes 14+ days, churn risk rises, so user-friendliness is a defintely key selling point.

The customer segments are characterized by:

• Mid-market focus, with current clients averaging over 150 employees.
• A total addressable market of approximately 1.3 million businesses in the U.S.
• A growing subset demanding integrated spend management capabilities.
• High concentration in industries such as Education, Retail, and Professional Services.
• A strong reliance on existing client satisfaction, evidenced by over 25% of new ARR from referrals in FY 2025.

Finance: draft 13-week cash view by Friday.

Paylocity Holding Corporation (PCTY) - Canvas Business Model: Cost Structure

You're looking at the expenses that fuel Paylocity Holding Corporation's growth engine as they scale their cloud-based HCM and payroll platform. For a Software-as-a-Service (SaaS) company like Paylocity Holding Corporation, the cost structure is heavily weighted toward product development and client acquisition, which is typical for a high-growth technology provider.

High R&D costs for continuous platform innovation are central to maintaining their competitive edge. Paylocity Holding Corporation invests heavily to roll out new modules and features, like the recent expansion into the Office of the CFO with Paylocity for Finance. For the full fiscal year 2025, the combined Non-GAAP Total Research and Development investment, which includes both expensed and capitalized amounts, represented 14.3% of total revenue. Based on the FY2025 total revenue of $1,595.2 million, this equates to approximately $228.11 million in combined R&D investment for the year.

Sales and marketing expenses to drive client acquisition and upsell form another significant cost pillar. This covers the direct sales force, commissions, and marketing efforts aimed at expanding their client base, which stood at approximately 41,650 clients across the U.S. as of June 30, 2025 (excluding acquisitions). For the full fiscal year 2025, Non-GAAP Sales and Marketing expenses consumed 21% of total revenue, amounting to about $334.99 million.

Personnel costs for the ~6,700 employees and dedicated support teams are embedded across all functions, but particularly in Sales & Marketing and Implementation/Client Services. As of June 30, 2025, Paylocity Holding Corporation employed 6,700 people. Personnel-related expenses, including wages, stock-based compensation, and benefits, are the primary driver within the operating expense categories.

The following table summarizes the major operating expense components as a percentage of FY2025 Total Revenue, which was $1,595.2 million.

Expense Category (Non-GAAP Basis)	FY2025 Margin (% of Total Revenue)	Approximate FY2025 Dollar Amount (in millions)
Sales and Marketing Expenses	21.0%	$334.99
Total Research & Development Investment (Combined)	14.3%	$228.11
General and Administrative Expenses	9.3%	$148.35

Technology infrastructure and cloud hosting costs (SaaS delivery) are primarily captured within the Cost of Revenues, which supports the delivery of their Software-as-a-Service platform. While the specific dollar amount for cloud hosting isn't broken out separately in the margin reporting, the company expects to realize cost efficiencies over the long term as they scale their client base. The focus on a unified, cloud-based platform means these costs are ongoing and scale with usage.

General and administrative expenses, including compliance and legal, cover corporate overhead, finance, HR, and compliance functions necessary to support a public, regulated entity. For the full fiscal year 2025, Non-GAAP G&A costs were 9.3% of total revenue, which translates to roughly $148.35 million. The company has shown a focus on driving leverage in this area; for instance, in Q1 2026, they achieved 70 basis points of leverage in G&A costs year-over-year.

Key cost drivers related to operations and support include:

• Employee-related expenses for direct sales and marketing staff.
• Costs for implementation and client services personnel.
• Computing costs associated with SaaS delivery.
• Amortization of capitalized implementation costs over 7 years.
• Marketing expenses to drive client acquisition.

Paylocity Holding Corporation (PCTY) - Canvas Business Model: Revenue Streams

You're looking at the core ways Paylocity Holding Corporation brings in cash as of late 2025. It's heavily weighted toward the sticky, predictable subscription base, but the interest rate environment has made the float income a much more significant component than in prior years.

The revenue structure is clearly segmented, though the non-subscription portion is aggregated in the public filings.

Revenue Stream Component	FY2025 Financial Amount (USD)
Recurring & Other Revenue from subscription fees	$1,471.8 million
Total Revenue (for context)	$1,595.2 million
Combined Float, Transactional, and Professional Services Revenue (Total Revenue - Recurring & Other Revenue)	$123.4 million

The subscription revenue is the bedrock of Paylocity Holding Corporation's financial stability. This recurring stream grew by 15% year-over-year in FY2025.

The float income stream is clearly a major driver of the non-subscription revenue, supported by the significant cash balances Paylocity Holding Corporation manages on behalf of its clients. The average daily balance of client funds for fiscal year 2025 sat at $3.0 billion.

The remaining revenue components are:

• Interest income generated from funds held for clients (float income)
• Fees for processing payroll, tax filings, and other transactional services
• Cross-sell revenue from new modules like Paylocity for Finance (Airbase integration)
• Professional services revenue (implementation and training fees)

The launch of Paylocity for Finance in FY2025 signals a clear strategic push to increase the revenue captured from the transactional and cross-sell categories by expanding into the Office of the CFO.