Paylocity Holding Corp

Previous wording

We are a leading cloud-based provider of human capital management, payroll and spend management software solutions that deliver a comprehensive platform for the modern workforce. Our platform offers an intuitive, easy-to-use product suite that helps businesses attract and retain talent, build culture and connection with their employees, and streamline and automate HR, payroll and spend management processes. We are expanding the spend management capabilities of our platform beyond expense management to include bill pay and accounts payable automation, corporate cards, and procurement capabilities through the acquisition of Airbase Inc. in October 2024. This integrated platform will enable HR and finance leaders to manage all their spend, including payroll, on a single platform.

Current wording

We are a leading cloud-based provider of HR, finance and IT software solutions that deliver a comprehensive platform for the modern workforce. Our platform offers an intuitive, easy-to-use product suite that helps businesses automate and streamline HR, finance and IT processes, attract and retain talent, and build culture and connection with their employees. We are expanding the spend management capabilities of our platform beyond expense management to include accounts payable automation, corporate cards, and procurement capabilities through the acquisition of Airbase Inc. in October 2024. This integrated platform will enable HR and finance leaders to manage all their spend, including payroll, on a single platform.

Previous wording

Effective management of human capital is a core function in all organizations and requires a significant commitment of resources. Our cloud-based software solutions, combined with our unified database architecture, are highly flexible and configurable and feature a modern, intuitive user experience. Our platform offers automated data integration with hundreds of third-party partner systems, such as 401(k), benefits and insurance provider systems. We plan to continue to invest in research and development efforts that will allow us to offer a broader selection of products to new and existing clients focused on experiences that solve our clients’ challenges.

Current wording

Effective management of human capital and business-related spend is a core function in all organizations and requires a significant commitment of resources. Our cloud-based software solutions, combined with our unified database architecture, are highly flexible and configurable and feature a modern, intuitive user experience. Our platform offers automated data integration with hundreds of third-party partner systems, such as 401(k), benefits and insurance provider systems. We plan to continue to invest in research and development efforts that will allow us to offer a broader selection of products to new and existing clients focused on experiences that solve our clients’ challenges.

Previous wording

We continue to invest across our entire organization as we grow our business over the long term. These investments include increasing the number of personnel across all functional areas, along with improving our solutions and infrastructure to support our growth. The timing and amount of these investments will vary based on the rate at which we add new clients and personnel and scale our application development and other activities. Many of these investments will occur in advance of experiencing any direct benefit from them, which will make it difficult to determine if we are effectively allocating our resources. We expect these investments to increase our costs on an absolute basis, but as we grow our number of clients and our related revenues, we anticipate that we will gain economies of scale and increased operating leverage. As a result, we expect our gross and operating margins will improve over the long term.

Current wording

We will continue to invest across our entire organization as we continue to grow our business over the long term. These investments include increasing the number of personnel across all functional areas, along with improving our solutions and infrastructure to support our growth. The timing and amount of these investments vary based on the rate at which we add new clients and personnel and scale our application development and other activities. Many of these investments will occur in advance of experiencing any direct benefit from them, which will make it difficult to determine if we are effectively allocating our resources. We expect these investments to increase our costs on an absolute basis, but as we grow our number of clients and our related revenues, we anticipate that we will gain economies of scale and increased operating leverage. As a result, we expect our gross and operating margins will improve over the long term.

Previous wording

Our recurring revenue model and high annual revenue retention rates provide significant visibility into our future operating results and cash flow from operations. This visibility enables us to better manage and invest in our business. Total revenues increased from $401.3 million for the three months ended March 31, 2024 to $454.5 million for the three months ended March 31, 2025, representing a 13% year-over-year increase. Total revenues increased from $1,045.2 million for the nine months ended March 31, 2024 to $1,194.5 million for the nine months ended March 31, 2025, representing a 14% year-over-year increase. The increase in year-over-year revenue growth was driven by the strong performance by our sales team. Uncertainties around market and economic conditions may impact revenue growth, which we have recently experienced and may continue to experience, through fluctuations in client employee counts, elongated sales cycles, client losses, and a changing interest rate environment, among other factors.

Current wording

Our recurring revenue model and high annual revenue retention rates provide significant visibility into our future operating results and cash flow from operations. This visibility enables us to better manage and invest in our business. Total revenues increased from $363.0 million for the three months ended September 30, 2024 to $408.2 million for the three months ended September 30, 2025, representing a 12% year-over-year increase. The increase in year-over-year revenue growth was driven by the strong performance by our sales team. Uncertainties around market and economic conditions may impact revenue growth, which we have recently experienced and may continue to experience, through fluctuations in client employee counts, elongated sales cycles, client losses, and a changing interest rate environment, among other factors.

Previous wording

We define Adjusted Gross Profit as gross profit before amortization of capitalized internal-use software costs, amortization of certain acquired intangibles, stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, and other items as described below. We define Adjusted EBITDA as net income before interest expense, income tax expense (benefit), depreciation and amortization expense, stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and other items as described below.

Current wording

We define Adjusted Gross Profit as gross profit before amortization of capitalized internal-use software costs, amortization of certain acquired intangibles, stock-based compensation expense and employer payroll taxes related to stock releases and option exercises, and other items as described below. We define Adjusted EBITDA as net income before interest expense, income tax expense, depreciation and amortization expense, stock-based compensation expense and employer payroll taxes related to stock releases and option exercises and other items as described below.

Previous wording

(2)Represents acquisition and nonrecurring transaction-related costs, lease exit activity and severance costs related to certain roles that have been eliminated. We exclude one-off severance costs that we incur as part of the normal course of our business operations.

Current wording

(2)Represents acquisition and transaction-related costs and severance costs related to certain roles that have been eliminated. We exclude one-off severance costs that we incur as part of the normal course of our business operations.

Previous wording

We generate substantially all of our recurring and other revenue from ongoing subscriptions to our cloud-based HCM and payroll software solutions, which are recurring in nature. Recurring fees for each client generally include a base fee in addition to a fee based on the number of client employees and the number of products a client uses. We also charge fees for our preparation of W-2 documents and annual required filings on behalf of our clients. We charge implementation fees for professional services provided to implement our HCM and payroll solutions.

Current wording

We generate substantially all of our recurring and other revenue from ongoing subscriptions to our cloud-based software solutions, which are recurring in nature. Recurring fees for each client generally include a base fee in addition to a fee based on the number of client employees and the number of products a client uses. We also charge fees for our preparation of W-2 documents and annual required filings on behalf of our clients. We charge implementation fees for professional services provided to implement our software solutions.

Previous wording

The number of client employees on our platform and the mix of products purchased by a client as well as the timing of services provided with respect to those client employees can vary each period. As such, the number of client employees on our system is not necessarily a good indicator of our financial results in any given period. Recurring and other revenue accounted for 91% and 93% of our total revenues for the three months ended March 31, 2024 and 2025, respectively, and 92% of our total revenues for both the nine months ended March 31, 2024 and 2025.

Current wording

The number of client employees on our platform and the mix of products purchased by a client as well as the timing of services provided with respect to those client employees can vary each period. As such, the number of client employees on our system is not necessarily a good indicator of our financial results in any given period. Recurring and other revenue accounted for 92% and 93% of our total revenues for the three months ended September 30, 2024 and 2025, respectively.

Previous wording

We earn interest income on funds held for clients. We collect funds for employee payroll payments and related taxes in advance of remittance to employees and taxing authorities. Prior to remittance to employees and taxing authorities, we earn interest on these funds through demand deposit accounts with financial institutions with which we have automated clearing house, or ACH, arrangements. We also earn interest by investing a portion of funds held for clients in highly liquid, investment-grade marketable securities.

Current wording

We earn interest income on funds held for clients. We collect funds from clients in advance of performing payroll, payroll tax filing and spend management services on behalf of those clients. Until these funds are remitted to the respective payees, we earn interest on these funds through demand deposit accounts with financial institutions with which we have automated clearing house, or ACH, arrangements. We also earn interest by investing a portion of funds held for clients in highly liquid, investment-grade marketable securities.

Previous wording

Cost of revenues includes costs to provide our HCM and payroll solutions which primarily consists of employee-related expenses, including wages, stock-based compensation, bonuses and benefits, relating to the provision of ongoing client support and implementation activities, payroll tax filing, distribution of printed checks and other materials as well as delivery costs, computing costs, amortization of certain acquired intangibles and bank fees associated with client fund transfers. Costs related to recurring support are generally expensed as incurred. Implementation costs related to our proprietary products are capitalized and amortized over a period of 7 years. Our cost of revenues is expected to increase in absolute dollars for the foreseeable future as we increase our client base. However, we expect to realize cost efficiencies over the long term as our business scales, resulting in improved operating leverage and increased margins.

Current wording

Cost of revenues consists primarily of employee-related expenses, including wages, stock-based compensation, bonuses and benefits, relating to the provision of ongoing client support and implementation activities, payroll tax filing, distribution of printed checks and other materials as well as delivery costs, computing costs, amortization of certain acquired intangibles and bank fees associated with client fund transfers. Costs related to recurring support are generally expensed as incurred. Implementation costs related to our proprietary products are capitalized and generally amortized over a period of 7 years. Our cost of revenues is expected to increase in absolute dollars for the foreseeable future as we increase our client base. However, we expect to realize cost efficiencies over the long term as our business scales, resulting in improved operating leverage and increased margins.

Previous wording

We also capitalize a portion of our internal-use software costs, which are then primarily amortized as Cost of revenues. We amortized $12.3 million and $15.2 million of capitalized internal-use software costs during the three months ended March 31, 2024 and 2025, respectively, and $32.5 million and $43.9 million of capitalized internal-use software costs for the nine months ended March 31, 2024 and 2025, respectively.

Current wording

We also capitalize a portion of our internal-use software costs, which are then primarily amortized as Cost of revenues. We amortized $13.8 million and $17.3 million of capitalized internal-use software costs during the three months ended September 30, 2024 and 2025, respectively.

Previous wording

Sales and marketing expenses consist primarily of employee-related expenses for our direct sales and marketing staff, including wages, commissions, stock-based compensation, bonuses, benefits, as well as marketing expenses and other related costs. Our sales personnel earn commissions and bonuses for attainment of certain performance criteria based on new sales throughout the fiscal year. We capitalize certain selling and commission costs related to new contracts or purchases of additional services by our existing clients and generally amortize them over a period of 7 years.

Current wording

Sales and marketing expenses consist primarily of employee-related expenses for our direct sales and marketing staff, including wages, commissions, stock-based compensation, bonuses, benefits, marketing expenses and other related costs. Our sales personnel earn commissions and bonuses for attainment of certain performance criteria based upon new sales throughout the fiscal year. We capitalize certain selling and commission costs related to new contracts or purchases of additional services by our existing clients and generally amortize them over a period of 7 years.

Previous wording

Research and development expenses consist primarily of employee-related expenses for our research and development and product management teams, including wages, stock-based compensation, bonuses and benefits. Additional expenses include costs related to the development, maintenance, quality assurance and testing of new technologies and ongoing refinement of our existing solutions. Research and development expenses, other than internal-use software costs qualifying for capitalization, are expensed as incurred.

Current wording

Research and development expenses consist primarily of employee-related expenses for our research and development and product management staff, including wages, stock-based compensation, bonuses and benefits. Additional expenses include costs related to the development, maintenance, quality assurance and testing of new technologies and ongoing refinement of our existing solutions. Research and development expenses, other than internal-use software costs qualifying for capitalization, are expensed as incurred.

Previous wording

We capitalize a portion of our development costs related to internal-use software. The timing of our capitalized development projects may affect the amount of development costs expensed in any given period. The table below sets forth the amounts of capitalized and expensed research and development expenses for the three and nine months ended March 31, 2024 and 2025.

Current wording

We capitalize a portion of our development costs related to internal-use software. The timing of our capitalized development projects may affect the amount of development costs expensed in any given period. The table below sets forth the amounts of capitalized and expensed research and development expenses for the three months ended September 30, 2024 and 2025.

Previous wording

General and administrative expenses consist primarily of employee-related costs, including wages, stock-based compensation, bonuses and benefits for our finance and accounting, legal, information systems, human resources and other administrative departments. Additional expenses include consulting and professional fees, occupancy costs, insurance and other corporate expenses. While we expect our general and administrative expenses to increase in absolute dollars as our company continues to grow, we expect to realize cost efficiencies as our business scales.

Current wording

General and administrative expenses consist primarily of employee-related costs, including wages, stock-based compensation, bonuses and benefits for our finance and accounting, legal, information systems, human resources and other administrative departments. Additional expenses include consulting and professional fees, occupancy costs, insurance and other corporate expenses. While we expect our general and administrative expenses to continue to increase in absolute dollars as our company continues to grow, we expect to realize cost efficiencies as our business scales.

Previous wording

Other income (expense) generally consists of interest income related to interest earned on our cash and cash equivalents, net of losses on disposals of property and equipment and interest expense related to our revolving credit facility.

Current wording

Other income (expense) generally consists of interest income related to interest earned on our cash and cash equivalents, net of interest expense related to our revolving credit facility.

Previous wording

Recurring and other revenue for the three months ended March 31, 2025 increased by $54.3 million, or 15%, to $421.1 million from $366.8 million for the three months ended March 31, 2024. Recurring and other revenue increased primarily as a result of incremental revenues from new and existing clients due to the strong performance by our sales team.

Current wording

Recurring and other revenue for the three months ended September 30, 2025 increased by $45.8 million, or 14%, to $378.9 million from $333.1 million for the three months ended September 30, 2024. Recurring and other revenue increased primarily as a result of incremental revenues from new and existing clients due to the strong performance by our sales team.

Previous wording

Interest income on funds held for clients for the three months ended March 31, 2025 decreased by $1.0 million, or 3%, to $33.5 million from $34.4 million for the three months ended March 31, 2024. Interest income on funds held for clients decreased primarily due to lower interest rates as compared to the prior fiscal year, partially offset by higher average daily balances of funds held for new and existing clients.

Current wording

Interest income on funds held for clients for the three months ended September 30, 2025 decreased by $0.5 million, or 2%, to $29.3 million from $29.9 million for the three months ended September 30, 2024. Interest income on funds held for clients decreased slightly, as the negative impact from lower interest rates was mostly offset by positive impact from higher average daily balances of funds held for new and existing clients as compared to the prior fiscal year.

Previous wording

Cost of revenues for the three months ended March 31, 2025 increased by $13.9 million, or 12%, to $129.9 million from $116.0 million for the three months ended March 31, 2024. Cost of revenues increased primarily as a result of the continued growth of our business, in particular, $5.6 million in additional employee-related costs, $3.0 million in additional amortization of internal use software, $2.9 million in additional processing and delivery related costs and $2.6 million in additional amortization of certain intangible assets. Gross margin remained consistent at 71% for both the three months ended March 31, 2024 and 2025.

Current wording

Cost of revenues for the three months ended September 30, 2025 increased by $13.4 million, or 12%, to $128.4 million from $115.0 million for the three months ended September 30, 2024. Cost of revenues increased primarily as a result of the continued growth of our business, in particular, $6.4 million in additional employee-related costs, $3.5 million in additional amortization of internal-use software, $2.5 million in additional amortization of certain intangible assets and $1.4 million in additional processing and delivery related costs. Gross margin increased from 68% for the three months ended September 30, 2024 to 69% for the three months ended September 30, 2025.

Previous wording

Sales and marketing expenses for the three months ended March 31, 2025 increased by $5.0 million, or 6%, to $91.8 million from $86.8 million for the three months ended March 31, 2024. The increase in sales and marketing expense was primarily due to $5.2 million of additional employee-related costs, including those incurred to expand our sales team.

Current wording

Sales and marketing expenses for the three months ended September 30, 2025 increased by $7.9 million, or 9%, to $96.4 million from $88.4 million for the three months ended September 30, 2024. The increase in sales and marketing expense was primarily due to $6.7 million of additional employee-related costs, including those incurred to expand our sales team.

Previous wording

Research and development expenses for the three months ended March 31, 2025 increased by $8.0 million, or 18%, to $51.4 million from $43.4 million for the three months ended March 31, 2024. The increase in research and development expenses was primarily due to $5.9 million of additional employee-related costs related to additional development personnel, net of capitalized internal-use software costs.

Current wording

Research and development expenses for the three months ended September 30, 2025 increased by $8.3 million, or 18%, to $55.6 million from $47.3 million for the three months ended September 30, 2024. The increase in research and development expenses was primarily due to $7.7 million of additional employee-related costs related to additional development personnel, net of capitalized internal-use software costs.

Previous wording

General and administrative expenses for the three months ended March 31, 2025 increased by $5.6 million, or 12%, to $54.5 million from $48.9 million for the three months ended March 31, 2024. General and administrative expenses increased primarily due to $3.2 million in additional employee-related costs during the three months ended March 31, 2025.

Current wording

General and administrative expenses for the three months ended September 30, 2025 increased by $5.4 million, or 11%, to $53.6 million from $48.2 million for the three months ended September 30, 2024. General and administrative expenses increased primarily due to $5.7 million in additional stock-based compensation expense largely driven by executive award forfeitures during the three months ended September 30, 2024.

Previous wording

Other income for the three months ended March 31, 2025 decreased by $4.8 million as compared to the three months ended March 31, 2024. The change in other income was primarily due to $4.3 million in additional interest expense related to borrowings under our revolving credit facility to fund the October 2024 acquisition of Airbase Inc.

Current wording

Other income for the three months ended September 30, 2025 decreased by $4.0 million as compared to the three months ended September 30, 2024. The change in other income was primarily due to $2.1 million reduction in interest earned on our cash and cash equivalents from lower average balances and $2.0 million in additional interest expense related to borrowings under our revolving credit facility.

Previous wording

Our effective tax rate was 22.9% and 27.7% for the three months ended March 31, 2024 and 2025, respectively. Our effective tax rate for both the three months ended March 31, 2024 and 2025 was higher than the federal statutory rate of 21% primarily due to an increase to non-deductible stock-based compensation under Internal Revenue Code Section 162(m) and state and local income taxes.

Current wording

Our effective tax rate was 28.0% and 35.9% for the three months ended September 30, 2024 and 2025, respectively. Our effective tax rate for both the three months ended September 30, 2024 was higher than the federal statutory rate of 21% primarily due to state and local income taxes. Our effective tax rate for the three months ended September 30, 2025 was higher than the federal statutory rate of 21% primarily due to stock-based compensation shortfalls realized, state and local income taxes and an increase in the valuation allowance as explained below.

Previous wording

Our primary liquidity needs are related to the funding of general business requirements, including working capital requirements, research and development, and capital expenditures. As of March 31, 2025, our principal source of liquidity was $477.8 million of cash and cash equivalents. We maintain a credit agreement that provides for a$550.0 million revolving credit facility, which may be increased up to$825.0 million. In September 2024, we borrowed $325.0 million under this credit facility to fund the acquisition of Airbase Inc. in October 2024. We had $243.8 million in outstanding borrowings under this credit facility at March 31, 2025, as we repaid $81.3 million in March 2025. Refer to Notes 4 and 8 of the Notes to the Unaudited Consolidated Financial Statements for additional details on the Airbase acquisition and credit agreement, respectively.

Current wording

Our primary liquidity needs are related to the funding of general business requirements, including working capital requirements, research and development, and capital expenditures. As of September 30, 2025, our principal source of liquidity was $165.2 million of cash and cash equivalents. We maintain a credit agreement that provides for a$550.0 million revolving credit facility, which may be increased up to$825.0 million. During fiscal 2025, we borrowed $325.0 million under this credit facility to fund the October 2024 acquisition of Airbase Inc. We had $81.3 million in outstanding borrowings under this credit facility at September 30, 2025, as we repaid $162.5 million in the second half of fiscal 2025 and an additional $81.3 million during the first quarter of fiscal 2026. Refer to Notes 4 and 8 of the Notes to the Unaudited Consolidated Financial Statements for additional details on the Airbase acquisition and credit agreement, respectively.

Previous wording

In April 2024, our board of directors authorized the repurchase of up to $500.0 million of our common stock (the "Repurchase Program"). The extent to which we repurchase shares, the number and price of any shares repurchased and the timing of any repurchases depends on the market price of our common stock, trading volume, general market conditions and other corporate and economic considerations. During the nine months ended March 31, 2025, we repurchased an aggregate of 472 thousand shares for approximately $93.6 million at an average cost per share of $198.11 under the Repurchase Program. As of March 31, 2025, approximately $256.4 million remains authorized for repurchases under the Repurchase Program.

Current wording

In April 2024, our board of directors authorized the repurchase of up to $500.0 million of our common stock (the "Repurchase Program"). In July 2025, our board of directors approved a $500.0 million increase to the Repurchase Program. The extent to which we repurchase shares, the number and price of any shares repurchased and the timing of any repurchases depends on the market price of our common stock, trading volume, general market conditions and other corporate and economic considerations. During the three months ended September 30, 2025, we repurchased an aggregate of 1.2 million shares for approximately $200.0 million at an average cost per share of $173.30 under the Repurchase Program. As of September 30, 2025, approximately $500.4 million remains authorized for repurchases under the Repurchase Program.

Previous wording

Funds held for clients and client fund obligations vary substantially from period to period as a result of the timing of payroll and tax obligations due. Our payroll processing activities involve the movement of significant funds from accounts of employers to employees and relevant taxing authorities. Though we debit a client’s account prior to any disbursement on its behalf, there is a delay between our payment of amounts due to employees and taxing and other regulatory authorities and when the incoming funds from the client to cover these amounts payable actually clear into our operating accounts. We currently have agreements with various major U.S. banks to execute ACH and wire transfers to support our client payroll and tax services. We believe we have sufficient capacity under these ACH arrangements to handle all transaction volumes for the foreseeable future. We primarily collect fees for our services via ACH transactions at the same time we debit the client’s account for payroll and tax obligations and thus are able to reduce collectability and accounts receivable risks.

Current wording

Our payroll and spend management processing activities involve the movement of significant funds from accounts of clients to their employees, relevant taxing authorities and vendors. Funds held for clients and client fund obligations will vary substantially from period to period mostly as a result of the timing of payroll and payroll tax obligations due. Though we debit a client’s account prior to any disbursement on its behalf, there is a delay between when our payments are due and when the incoming funds from the client to cover these amounts payable actually clear into our operating accounts. We currently have agreements with various major U.S. banks to execute ACH and wire transfers to support our services. We believe we have sufficient capacity under these ACH arrangements to handle all transaction volumes for the foreseeable future. We primarily collect fees for our HCM and payroll services via ACH transactions at the same time we debit the client’s account for payroll and payroll tax obligations and thus are able to reduce collectability and accounts receivable risks.

Previous wording

Net cash provided by operating activities was $304.7 million and $331.7 million for the nine months ended March 31, 2024 and 2025, respectively. The change in net cash provided by operating activities from the nine months ended March 31, 2024 to the nine months ended March 31, 2025 was primarily due to improved operating results after adjusting for non-cash items including stock-based compensation expense, depreciation and amortization expense and deferred income tax expense (benefit) and other, accompanied by changes in operating assets and liabilities during the nine months ended March 31, 2025 as compared to the nine months ended March 31, 2024.

Current wording

Net cash provided by operating activities was $91.5 million and $86.5 million for the three months ended September 30, 2024 and 2025, respectively. The change in net cash provided by operating activities from the three months ended September 30, 2024 to the three months ended September 30, 2025 was primarily due to changes in operating assets and liabilities, partially offset by improved operating results after adjusting for non-cash items including stock-based compensation expense, depreciation and amortization expense and deferred income tax expense (benefit) during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Previous wording

Net cash used in investing activities was $76.4 million and $328.5 million for the nine months ended March 31, 2024 and 2025, respectively. The net cash used in investing activities is significantly impacted by the timing of purchases and sales and maturities of investments as we invest portions of funds held for clients in highly liquid, investment-grade marketable securities. The amount of funds held for clients invested will vary based on timing of client funds collected and payments due to client employees and taxing and other regulatory authorities.

Current wording

Net cash used in investing activities was $13.3 million and $17.7 million for the three months ended September 30, 2024 and 2025, respectively. The net cash used in investing activities is significantly impacted by the timing of purchases and sales and maturities of investments as we invest portions of funds held for clients in highly liquid, investment-grade marketable securities. The amount of funds held for clients invested will vary based on timing of client funds collected and payments due to client employees and taxing and other regulatory authorities.

Previous wording

The change in net cash used in investing activities was primarily due to $265.8 million in additional amounts paid for acquisitions, net of cash and funds held for clients acquired, and a $99.7 million decrease in proceeds from the sales and maturities of available-for-sale securities, partially offset by a $109.9 million decrease in purchases of available-for-sale securities during the nine months ended March 31, 2025 as compared to the nine months ended March 31, 2024.

Current wording

The change in net cash used in investing activities was primarily due to a $10.3 million increase in purchases of available-for-sale securities, partially offset by a $7.3 million increase in proceeds from the sales and maturities of available-for-sale securities during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Previous wording

Net cash provided by financing activities was $927.5 million and $543.6 million for the nine months ended March 31, 2024 and 2025, respectively. The change in net cash provided by financing activities was primarily due to a decrease in the net change in client fund obligations of $534.2 million due to the timing of client funds collected and related remittance of those funds to client employees and taxing authorities, $91.1 million in share repurchases, and $81.3 million repayment of amounts borrowed on our credit facility, partially offset by $325.0 million in borrowings under our credit facility during the nine months ended March 31, 2025 as compared to the nine months ended March 31, 2024.

Current wording

Net cash used in financing activities was $318.3 million and $229.7 million for the three months ended September 30, 2024 and 2025, respectively. The change in net cash used in financing activities was primarily due to an increase in the net change in client fund obligations of $692.0 million due to the timing of client funds collected and related remittance of those funds to client employees and taxing authorities. This was partially offset by $325.0 million in borrowings under our credit facility during the three months ended September 30, 2024, and $200.0 million in share repurchases and $81.3 million repayment of amounts borrowed on our credit facility during the three months ended September 30, 2025.

Previous wording

At March 31, 2025, our principal commitments consisted of $243.8 million in borrowings on our revolving credit facility, which is contractually not due in the next twelve months, and related interest payments, as well as $67.3 million in operating lease obligations, of which $10.9 million is due in the next twelve months. We also had $79.5 million in purchase obligations, of which $47.4 million is due in the next twelve months.

Current wording

At September 30, 2025, our principal commitments consisted of $81.3 million in borrowings on our revolving credit facility, which is contractually not due in the next twelve months, and related interest payments, as well as $63.2 million in operating lease obligations, of which $10.4 million is due in the next twelve months. We also had $84.6 million in purchase obligations, of which $55.2 million is due in the next twelve months.

Previous wording

We expect to continue to invest in capital spending as we continue to grow our business and expand and enhance our operating facilities, data centers and technical infrastructure. Future capital requirements will depend on many factors, including our rate of sales growth. In the event that our sales growth or other factors do not meet our expectations, we may eliminate or curtail capital projects in order to mitigate the impact on our use of cash. Capital expenditures were $11.7 million and $7.6 million for the nine months ended March 31, 2024 and 2025, respectively, exclusive of capitalized internal-use software costs of $44.5 million and $45.6 million for the same periods, respectively.

Current wording

We expect to continue to invest in capital spending as we continue to grow our business and expand and enhance our operating facilities, data centers and technical infrastructure. Future capital requirements will depend on many factors, including our rate of sales growth. In the event that our sales growth or other factors do not meet our expectations, we may eliminate or curtail capital projects in order to mitigate the impact on our use of cash. Capital expenditures were $2.3 million and $3.8 million for the three months ended September 30, 2024 and 2025, respectively, exclusive of capitalized internal-use software costs of $15.2 million and $15.5 million for the same periods, respectively.