NASDAQ: PCTY

Our software solutions provide the following key benefits to our clients:

•Our platform automates processes across the employee lifecycle in one place, so organizations save time, reduce administrative burden, and create a more seamless experience for employees and managers alike. From recruiting and onboarding to benefits, payroll, and performance management, our solution is designed to support an organization’s HR needs and provide the flexibility to scale as it grows.

•Our Finance and IT tools support higher efficiency and compliance across the organization. Our Finance tools centralize payroll and non-payroll spend, including expense management, accounts payable, corporate cards and procurement. Our IT tools automate provisioning, access, and updates to software and hardware with a direct connection to the employee record.

•Our platform is built on a single employee record with workflows and integrations designed to automate work across teams and systems. Employees can access their information and tools through a unified web and mobile experience. Analytics and reporting capabilities are embedded throughout the platform to deliver value with intelligent automation, tailored insights, and embedded experiences that provide real-time guidance to administrators and employees.

•Ignite AI, our platform-wide AI with agents, is embedded throughout our platform bringing data, insights, and automation into moments where decisions are made and work gets done. Purpose-built agents automate tasks across pay, time, recruiting, and other places where work often slows down. We also offer the Ignite AI Hub, a centralized dashboard for managing and measuring AI across the organization where leaders can measure business impact and productivity gain, monitor adoptions across teams, control which agents are active and identify new opportunities for automation. It provides the visibility and control organizations need to confidently deploy AI while keeping people at the center of decision-making.

•We supplement our comprehensive software solutions with an integrated implementation and client service organization designed to meet the needs of our clients and prospects.

•Our software solutions offer our clients automated data integration with hundreds of third-party partner systems in our Integration Marketplace, such as 401(k), benefits and insurance provider systems. This integration reduces the complexity and risk of error of manual data transfers and saves time for our clients and their employees. We

integrate data with these related systems through a secure connection, which significantly decreases the risk of unauthorized third-party access and other security breaches.

We market and sell our products through our direct sales force. We generate sales leads through a variety of focused marketing initiatives and from our extensive referral network of 401(k) advisors, benefits administrators, insurance brokers, third-party administrators, HR consultants and accountants. We derive revenue from a client based on the solutions purchased by the client, the number of client employees and the amount, type and timing of services provided with respect to those client employees. Our annual revenue retention rate was greater than 92% in each of our 2024, 2025 and 2026 fiscal years. Our total revenues increased from $1,402.5 million in fiscal 2024 to $1,595.2 million in fiscal 2025, representing a 14% year-over-year increase, and to $1,771.3 million in fiscal 2026, representing an 11% year-over-year increase. We believe our recurring revenue model and high annual revenue retention rates provide significant visibility into our future operating results.

Our Strategy

We intend to strengthen and extend our position as a leading cloud-based provider of HCM, finance and IT software solutions. Key elements of our strategy include the following:

•Extend Technological Leadership. We continue to invest in our platform, including AI, automation, analytics, and mobile capabilities, to enhance the functionality and efficiency of our solutions. Built on a unified, cloud-based architecture, our platform helps businesses streamline HR, finance, and IT operations, manage spend and talent and build culture and connection. AI is embedded directly into everyday workflows to save time, reduce manual effort, and support better decision-making. We intend to continue advancing our platform to address evolving client needs and leverage emerging technology opportunities.

•Grow Our Client Base. We believe that our current client base represents only a small portion of the organizations that could benefit from our solutions. Our clients typically have between 10 to 5,000 employees. While we provide our software solutions to approximately 44,400 clients across the U.S. (excluding clients acquired through acquisitions) as of June 30, 2026, there are approximately 1.3 million businesses with 10 to 5,000 employees in the U.S., employing approximately 73 million people, according to the U.S. Census Bureau in 2022. We believe our realized target addressable market is approximately $22.5 billion as clients, on average, purchase 50% or more of our suite of solutions. As we continue to expand our product offerings, we believe that we have an opportunity to increase the amounts clients spend on our solutions per employee and to expand our addressable market. As we expand our client base and number of client employees, we will also grow our sales organization.

•Expand Our Product Offerings. We believe a significant part of our leadership position is the result of our investment and innovation in our product offerings. We plan to continue to invest in product development efforts that will allow us to offer a broader selection of products to new and existing clients.

•Further Develop Our Referral Network. We have developed a strong network of referral participants, such as 401(k) advisors, benefits administrators, insurance brokers, third-party administrators, HR consultants and accountants that recommend our solutions and provide referrals. We believe that our platform’s automated data integration with hundreds of related third-party partner systems is valuable to our referral participants, as they are able to access payroll, HR and finance data through a single system which decreases complexity and cost and complements their own product offerings. We plan to increase integration with third-party providers and expand our referral network to grow our client base and lower our client acquisition costs.

Our Products

Our HCM, finance and IT software solutions deliver a unified platform for the modern workplace. Our platform offers a unified, easy-to-use product suite that helps businesses streamline HR, finance, and IT operations, manage spend and talent, and build culture and connection with AI embedded directly into everyday workflows to save time, reduce manual effort, and support better decision-making. Our product suite includes the following categories:

Payroll

Payroll and Tax Services – Our Payroll and Tax Services solution is designed to simplify payroll, automate processes and manage complex compliance requirements within one system. Our payroll solution leverages data from our Time & Labor and Human Resources solutions to accurately calculate wages, deductions and withholdings, without the need for manual reentry. Clients work with our experts to configure general ledger integrations, accruals and complex reports to enable data-driven decision making. Our integration capabilities also automatically transfer 401(k) information, retirement plans and benefit files to third-party providers. Through our Tax Services solutions, we accurately prepare and file the necessary tax withholdings and filing documents for local, state and federal jurisdictions.

Global Payroll – Our cloud-based global payroll solution enables U.S.-based companies to manage payroll for employees outside the U.S. in line with complex local and country-specific requirements across over 100 countries. It also provides consolidated reporting capabilities to efficiently manage a global employee base with real-time access to payroll data.

On Demand Payment – On Demand Payment provides employees with visibility into their earned wages in between pay cycles based on their hours worked and offers financial flexibility to employees through access to a portion of their earned wages before their scheduled payday without impacting the client’s standard payroll process.

Garnishments – Our Garnishments solution provides the calculation, setup and maintenance of historical deduction records and performs calculation validation against state and federal legislation to mitigate compliance risk and prevent costly penalties and errors.

Elevate Payroll – A dedicated team of specialists executes critical payroll processes on behalf of clients, reducing administrative burden and improving execution which allows our clients to better focus on strategic priorities. Our clients remain in control and own decisions, while we manage tasks on their behalf.

Human Resources

Human Resources – Our Human Resources solutions streamline processes using modern, mobile-enabled tools that help save time by automating administrative tasks and providing data-driven reporting. Clients can track headcount and status for positions, manage position and manager changes, manage compliance tracking and reporting and employee data and documents in one central location.

Employee Self-Service (Home) – Our Home module provides employees with access to their information 24/7, which allows them to view checks, request time off, clock in and out, update personal data and collaborate with teammates. Employees can also enroll in benefits, view coverage, access training or view course completion status on-the-go via our mobile app. An AI Assistant answers Paylocity-centric questions, as well as client-specific ones based on information in their employee handbooks.

Workflows & Documents – Workflows, the process automation engine embedded throughout our platform, enables clients to automate manual processes through configurable workflows and pre-built templates, improving efficiency and data accuracy. Documents provides a secure, centralized repository for employee records, helping clients stay organized, manage access through role-based permissions and replace manual, paper-based processes.

HR Compliance Dashboard – With our HR Compliance Dashboard, clients save time and money by staying up to date with new laws and regulations related to topics such as employment verification, Equal Employment Opportunity and compensation.

Elevate HR & HR Edge – In-house experts provide operational HR support like executing HR administration data audits, providing compliance guidance, developing policies and guiding with best practices while clients retain decision making

authority. HR Edge provides another option for clients looking for advisory and best practice support without the level of hands-on execution offered by Elevate HR.

Time & Labor

Time and Attendance – Our Time and Attendance solution accurately tracks time and attendance data, eliminating the need for manual tracking of accruals and reducing administrative tasks. Employees and supervisors can request and manage time off, edit timecards and manage schedule changes. A customizable supervisor dashboard provides at-a-glance visibility to missed punches, pending time off requests, attendance exceptions and more.

Scheduling – Clients can simplify scheduling by leveraging AI-driven shift recommendations and budgeting/scheduling advice, leveraging templates and building policies based on duration, time between shifts and skills/certifications. Shift swapping and open shift claiming offer flexibility to employees, ensuring optimal coverage and controlled labor costs. Managers and employees can easily manage their schedules from our mobile app to ensure the appropriate shift coverage.

Time Collection – Our wide variety of time collection devices include kiosks, state-of-the-art time clocks, mobile and web applications and even smartwatches to meet unique needs of different companies while enabling employees to clock in wherever business is conducted. Advanced features include specifying geographic parameters for mobile punch-in, answering attestation prompts and other health and safety checks.

Talent

Recruiting – Our Recruiting tools help clients streamline talent acquisition processes from application creation through candidate acceptance. Clients can reach candidates through online job postings and mobile-friendly application methods, reduce bias through candidate masking capabilities, simplify screening and background check processes, coordinate interviews through scheduling tools and calendar integrations and communicate with candidates through email, text messaging and video interviews. The solution also provides real-time access to candidate information to support timely hiring decisions. We also offer an AI-powered add-on that enables organizations to rediscover and re-engage existing candidates within their applicant tracking system while automating outreach, screening and interview scheduling.

Onboarding – Our Onboarding tools enable new employees to complete all pre-hire tasks through digital data collection to gather important personal and confidential information and documentation right through our platform. Clients can streamline processes such as handbook acknowledgment, tax withholding forms, I-9 document verification, E-Verify and many others. Additionally, new hires feel an instant connection to their team and employer with welcome notes from leaders, introductory videos, company culture information and company policies.

Learning – Our Learning tools enable clients to assign, deliver, and track employee training across a variety of topics and delivery methods, including on-demand courses, webinars and mobile learning. Clients can create and manage custom training content, leverage a library of out-of-the-box compliance and professional development courses and empower employees to share knowledge and expertise through user-generated training content.

Performance – Our Performance tools support ongoing performance management through employee reviews, goal tracking and career development planning. Clients can facilitate continuous, goals-driven conversations and document employee accomplishments through Journals, while succession planning tools, including 9-box assessments, help clients evaluate performance and visualize workforce talent.

Compensation – Our Compensation tools help clients align between organizational goals, budgets and participant eligibility in an efficient process that reduces manual effort and paper-based budgeting activities. Our customized dashboards provide visibility to individual performance and compensation history at custom permission levels and the full value of an employee’s compensation and benefits. Clients can create employee-facing Total Rewards Statements in bulk to demonstrate the full compensation an employee receives, including not just pay, but also benefits, time off, and more.

Market Pay – Market Pay provides real-time insights for HR, leaders and managers making it easy for them to understand their local market, identify trends and make data-driven decisions about employee compensation so they can pay employees fairly, outpace competitors to attract and retain top talent and remain compliant with laws and regulations.

Benefits

Benefit Enrollment & Updates – Our Benefits tools help clients administer benefit plans and provide employees with a streamlined enrollment and management experience across desktop and mobile devices. Clients can manage benefit offerings and enrollment rules, while employees can make and update benefit elections, access account information and receive guidance through AI-powered Benefit Decision Support. Embedded communications and training tools help employees stay informed about important dates and available benefit options.

Third-Party Administrative (TPA) Solutions – Our TPA solutions are designed to modernize the administration of Health Savings Account (“HSA”), Flexible Savings Account (“FSA”), Health Reimbursement Arrangement (“HRA”), Transportation Management Account (“TMA”) and Premium Only Plan (“POP”) benefits by providing users with a single, unified access point for payroll, HR, and benefits administration. Our TPA solutions include mobile and web access, allowing users to view transaction details and account balances while having the ability to submit claims from our integrated employee portal. These solutions also ease the administration of COBRA coverage and retiree billing.

Retirement - Retirement connects payroll and contribution management in one unified experience, helping clients streamline plan administration and align payroll and retirement processes.

Employee Experiences

Community – Community is an integrated part of our platform that streamlines communication and fosters employee engagement across distributed workforces, including employees who are remote, mobile, or do not have corporate email access. Clients can centralize announcements in a company feed, manage communications through an intuitive dashboard and support employees through Ask an Expert groups that enable questions and responses at scale. Community also offers capabilities such as chat, file sharing, team groups, employee profiles, enhanced directory and search functionality to help employees connect, collaborate, and access information.

Video – Our Video tools enable clients to record, upload and embed videos across our HCM platform to increase collaboration, morale, engagement and productivity. Clients can embed videos seamlessly into tasks that are critical to their business such as leadership announcements, job postings, onboarding, performance journals, surveys and more.

Employee Voice – Employee Voice helps clients automatically and continuously collect feedback that is indicative of employee engagement and retention. AI-generated sentiment summaries synthesize feedback alongside dashboards and heatmaps that make it simple to understand feedback at scale. It also includes the tools to share relevant insights with leadership and managers and create action plans to drive accountability.

Recognition & Rewards – Recognition & Rewards allows clients to drive engagement and retention via a frictionless experience embedded throughout our platform. Managers and peer employees can provide direct recognition and rewards for outstanding performance and impact with monetary awards, digital gift cards or charity donations seamlessly processed through our integrated payroll and tax platform. Administrators retain full control and visibility into how rewards are funded and distributed, ensuring alignment with company culture, objectives, budgets and policies.

Data Insights – With our Data Insights solution, our clients can evaluate their organizations through insights in areas such as headcount, turnover, labor costs and composition of their employee populations that allow them to customize, fund and deploy strategies to support employees.

Reporting – Clients can build and customize reports within our platform. We also offer hundreds of standard reports that clients can use as-is or adjust to suit their needs. New reports are added regularly in response to regulatory changes, compliance updates and client feedback.

Paylocity for Finance

Headcount Planning – Headcount Planning centralizes staffing plans, approvals and forecasts into a streamlined process. Finance, HR, and hiring managers can collaborate in real time using customizable workflows, visibility controls and dynamic organizational charts to track and update headcount plans as business needs evolve. With integrated analytics and automated notifications, clients can monitor budget versus forecast, drill down into specific teams or roles, open approved roles and stay ahead of staffing needs.

Expense Management – Expense Management provides AI-powered expense reports with real-time policy enforcement, categorization and compliance.

Accounts Payable Automation – AI-powered Accounts Payable Automation automates every step of the AP process, from vendor onboarding and invoice processing to bill coding, approvals, payments, syncing to the enterprise resource planning system and reconciliation.

Corporate Cards – Corporate Cards enables clients to issue virtual or physical cards with built-in controls and real-time tracking, while integrating with existing credit card programs to provide centralized visibility and control of all card spend.

Guided Procurement – Guided Procurement centralizes purchase requests with automated workflows to ensure compliance, efficiency and collaboration across finance, procurement, HR and business stakeholders such as IT and Legal.

Paylocity for IT

Access Management & Identity – Access Management & Identity connects employee data with IT systems to automate access throughout the employee lifecycle, from onboarding and role changes to offboarding. With automated account provisioning, single sign-on, multi-factor authentication, directory integrations and access monitoring, clients can help employees get productive faster while strengthening security and compliance.

Asset Management – Asset Management centralizes the tracking and management of employee hardware, including laptops, desktops, key cards, accessories, and specialty tools. Using real-time employee data and automated workflows, clients can streamline device requests during onboarding, manage inventory and refresh cycles, automate repairs and returns and help ensure employees have the equipment they need from day one through offboarding.

Client Support Teams

We supplement our comprehensive software platform with an integrated implementation and client service organization with deep subject matter expertise. Our core operation consists of various specialists, including implementation teams, account managers, payroll processing and tax service teams. Delivering a positive experience and a high level of support is an essential element of our ability to sell our solutions and retain clients.

Implementation and Training Services

Our clients are typically either migrating to our platform from a competitive solution or are adopting their first online HCM, finance or IT solution. These organizations often have limited internal resources and rely on us for the implementation of our solutions. Each client is guided through the implementation process by our knowledgeable consultants for all implementation matters. We believe our ability to rapidly implement our solutions is principally due to the combination of our emphasis on engagement with the client, our standardized methodology, our cloud-based architecture and our highly configurable, easy-to-use products.

We offer clients the opportunity to utilize on-demand or in-class training designed to provide them with general knowledge on our solutions. We also host an annual conference for our clients to allow them to learn about new products and features and to provide feedback and learn best practices.

Client Service

Our client service model is designed to serve and support the needs of our clients and to build loyalty by developing strong relationships with them. We strive to achieve high revenue retention, in part, by delivering high-quality service. Our revenue retention was greater than 92% in each of fiscal 2024, 2025 and 2026. Each client is assigned an account management team that serves as the central point of contact for any questions or support needs. We believe this approach enhances client service by providing clients with access to knowledgeable resources who understand their businesses, respond quickly, and are accountable for the overall client experience. Account managers are supplemented by teams with deep technical and subject matter expertise who help to expediently and effectively address client needs. We also proactively solicit client feedback through ongoing surveys from which we receive actionable feedback that we use to enhance our client service processes. We have also built an online knowledge repository for clients that provides industry content and Paylocity product and service information.

Tax and Regulatory Services

Our software contains a rules engine designed to make accurate federal, state, and local tax calculations that is continually updated to support all pertinent legislative changes across U.S. jurisdictions with the support of our tax compliance professionals. Our tax service teams provide a variety of solutions to clients, including processing payroll tax deposits, preparing and filing quarterly and annual employment tax returns and amendments and resolving client employment tax notices. Our tax filing and compliance departments perform multiple audits to allow clients to remit timely and accurate tax payments. In addition, these teams execute a series of audit routines to ensure that quarterly tax filings are accurate and submitted on a timely basis.

Clients

Excluding clients acquired through acquisitions, as of June 30, 2026, we provided our HCM, finance and IT software solutions to approximately 44,400 clients across the U.S. The rate at which we add clients is variable period-to-period and is also seasonal, as many clients switch solutions during the first calendar quarter of the year. Clients include for-profit and non-profit organizations across industries including business services, financial services, healthcare, manufacturing, restaurants, retail, technology and others. For each of the three years ended June 30, 2024, 2025 and 2026, no client accounted for more than 1% of our revenues.

Sales and Marketing

We market and sell our products and services through our direct sales force. Our direct sales force includes sales representatives who have defined geographic territories throughout the U.S. We seek to hire experienced sales representatives wherever they are located and believe we have room to grow the number of sales representatives in each of our territories.

The sales cycle begins with a sales lead generated by the sales representative, through our third-party referral network, a client referral, our telemarketing team, our external website, marketing lead generation strategies or other territory-based activities. We support our sales force with a marketing program that includes seminars and webinars, email marketing, social media marketing, broker events and web marketing.

Referral Network

We have developed a strong network of referral participants, such as 401(k) advisors, benefits administrators, insurance brokers, third-party administrators, HR consultants and accountants that recommend our solutions and provide referrals. Our referral network has become an increasingly important component of our sales process, and in fiscal 2026, more than 25% of our new client revenue originated through referrals from participants in our referral network.

We believe participants in our referral network refer potential clients to us because of the strength of our products and services, the value we provide our referral partners through our broker portal, the fact that we do not provide services that compete with our referral networks and because we offer third parties the ability to integrate their systems with our platform. Unlike other providers who also provide retirement plans, health insurance and other products and services competitive with the offerings of the participants in our referral network, we focus only on our core business of providing HCM, finance and IT solutions. In some cases, we have formalized relationships in which we are a recommended vendor of these participants. In other cases, the relationships are informal. We typically do not compensate these participants for referrals.

Marketplace

We have developed a partner ecosystem of third-party systems, such as 401(k), benefits and insurance provider systems, with whom we provide automated data integration for their clients. These third-party providers require certain financial, payroll and other employee demographic information from their clients to efficiently provide their respective services. After securing authorization from the client, we exchange data with these providers. In turn, these third-party providers supply data to us, which allows us to deliver comprehensive HR and benefit management services to our clients. We believe our partnerships with these third parties are an important part of their service offerings. We have also developed our solutions to integrate with a variety of other systems used by our clients, such as accounting, point of sale, banking, expense management, recruiting, background screening and skills assessment solutions.

Paylocity’s automated data integration reduces the complexity and risk of error of manual data transfers and saves clients and employees time. Direct and automated data transmission improves the accuracy of data and facilitates data collection in partners’ systems. Having automated data integration with an HCM, finance and IT provider differentiates partners’ product offerings, strengthening their competitive positioning in their own markets.

Technology

Our platform is built on a unified, cloud-based architecture that gives us an advantage over many traditional systems, which are disparate, less flexible and require longer and more costly development and upgrade cycles. Clients do not need to install our software in their data centers and can access our solutions through any mobile device or web browser with Internet access. Our platform helps businesses across HR, finance, and IT streamline operations, manage spend and talent and build culture and connection. AI is embedded directly into everyday workflows to save time, reduce manual effort, and support better decision-making.

We use multiple cloud hosting and third-party data center providers to host our solutions, including data centers in Franklin Park, Illinois and Kenosha, Wisconsin (for backup and disaster recovery). We supply the hardware infrastructure and are responsible for the ongoing maintenance of our equipment at all data center locations.

We maintain comprehensive security programs designed to protect the security and integrity of client and employee data, protect against security threats or data breaches and prevent unauthorized access. Refer to Item 1C. Cybersecurity for more information on our security programs.

Competition

The market for HCM, finance and IT software solutions is both fragmented and highly competitive. Our competitors vary for each of our solutions and primarily include payroll and HR service and software providers, such as Automatic Data Processing, Inc., Dayforce, Inc., Paychex, Inc., Paycom Software, Inc., Ultimate Kronos Group and other local and regional providers.

We believe the principal factors on which we compete in our market include the following:

•Solutions built to connect with today’s modern workforce;

•Comprehensive product suite on a single platform;

•Breadth and depth of product functionality;

•Configurability and ease of use of our solutions;

•Modern, mobile, intuitive and consumer-oriented user experience;

•Benefits of a cloud-based technology platform;

•Ability to innovate and respond to client needs rapidly;

•Domain expertise in HCM and payroll;

•Quality of implementation and client service;

•Ease of implementation;

•Real-time web-based payroll processing; and

•Access to a wide variety of complementary third-party service providers.

We believe that we compete favorably on these factors and our ability to remain competitive will largely depend on the success of our continued investment in sales and marketing, research and development and implementation and client services.

Research and Development

We invest heavily in research and development to continuously introduce new modules, technologies, features and functionality. We are organized into small product-centric teams that utilize an agile development methodology. We focus our efforts on developing new modules and core technologies and on further enhancing the usability, functionality, reliability, performance and flexibility of existing modules.

Research and development costs, including research and development costs that were capitalized, were $253.9 million, $281.7 million and $303.2 million for the years ended June 30, 2024, 2025 and 2026, respectively.

Intellectual Property

Our success is dependent, in part, on our ability to protect our proprietary technology and other intellectual property rights. We rely on a combination of trade secrets, copyrights and trademarks, as well as contractual protections to establish and protect our intellectual property rights. We require our employees, consultants and other third parties to enter into confidentiality and proprietary rights agreements and control access to software, documentation and other proprietary information. Although we rely on laws respecting intellectual property rights, including trade secret, copyright and trademark laws, as well as contractual protections to establish and protect our intellectual property rights, we believe that factors such as the technological and creative skills of our personnel, creation of new modules, features and functionality and frequent enhancements to our modules are the most essential means to establishing and maintaining our technology leadership position.

Governmental Regulation

As a leading cloud-based provider of HCM, finance and IT software solutions, our platform contains a significant amount of sensitive data related to clients, employees of our clients, business partners and our employees. Data privacy represents a major risk for organizations globally, including those in the United States. The global regulatory landscape for data privacy is rapidly evolving and is expected to continue doing so for the foreseeable future. Many national, state and local government bodies have adopted or are considering adopting laws and regulations related to the collection, use and disclosure of personal information. In the United States, these include rules and regulations promulgated under the authority of the Federal Trade Commission, the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), state breach notification laws, and state privacy laws, such as the California Consumer Privacy Act of 2018 (“CCPA”) and the Illinois Biometric Information Privacy Act (“BIPA”). Because we and some of our clients have international operations and employees, the European Union General Data Protection Regulation (“GDPR”) and other international data privacy laws may also impact certain aspects of our processing of client and employee information.

Many of our solutions are designed to help clients in complying with applicable U.S. federal, state and local laws and regulations. Consequently, our products and services may be subject to increasing and evolving regulatory requirements, including those related to tax, benefits and other laws. As these requirements proliferate, we may be required to modify our products and services to maintain compliance. These regulatory changes could reduce or eliminate the need for some of our products and services, hinder our development of new products and services or adversely affect the functionality and acceptance of our solutions. This could, in turn, impose additional costs to comply, modify or further develop our products and services. Additionally, it could also increase the costs or time needed to introduce new products and services or even prevent their introduction altogether. For example, the adoption of new money transmitter or money services business statutes in jurisdictions, or changes in regulators’ interpretation of statutes, could require us to register, obtain licenses or limit our business activities until we secure the appropriate licenses.

Our ability to comply with and address these evolving requirements and regulations applicable to our business depends on several factors, including the functionality and design of our solutions and how our clients and their employees use them. We have implemented established frameworks and policies and procedures to protect the accuracy, privacy and security of the information we handle for our employees and on behalf of our clients and their employees. Additionally, we voluntarily undergo periodic audits and examinations and maintain certain certifications to demonstrate our commitment to regulatory compliance.

The foregoing description does not provide an exhaustive list of the laws and regulations governing or impacting our business. See the discussion contained in the “Risk Factors” section in Part I, Item 1A of this Annual Report on Form 10-K for information regarding changes in laws and regulations that could have a materially adverse effect on our business, operating results or financial condition.

Human Capital

As a leading cloud-based provider of HCM, finance and IT software solutions, we are committed to delivering the most modern suite of solutions that drive employee engagement and a more connected culture for both our clients and our employees. Our senior executive team, together with our board of directors, drives our human capital strategy, which includes key initiatives related to our employees and company culture.

As of June 30, 2026, our workforce consisted of approximately 6,900 employees, substantially all of which were located in the United States and employed on a full-time basis.

Culture & Engagement

At Paylocity, we strive to be an organization where every employee feels welcomed and is empowered to do their best work. Our core values drive our culture – we believe in earning it every day, that growth fuels opportunity, thinking next generation, living the reputation, and being unbeatable together. Our core values serve as the foundation from which we create an engaging culture for our employees, how we train and develop our teams and how we identify the right talent for our organization. Our approach to drive a strong culture and employee engagement has been validated externally as Paylocity has been named Newsweek Greatest Workplaces for Parents & Families 2026, Time America’s Top WorkTech Companies 2026 and was also Great Place To Work certified for several consecutive years.

We also support a number of employee resource groups (“ERGs”), including PCTY Equality, PCTY OneWorld, PCTY Sheroes, PCTY Sustainability, and PCTY Mental Health. Each of these groups is organized to give employees the chance to build community and connections, voice their ideas and perspectives, personally develop and grow, and shape our culture to make a difference at work and in our local communities.

Learning & Development

We are committed to fostering employee growth and career development through upskilling, development experiences, and networking opportunities. By providing employees with the tools, resources, and support needed to advance their careers, we seek to foster engagement, build skills and expertise, and support the long-term success of our organization. We invest in employee development through a variety of training programs, including role-specific development initiatives for operations team members, sales training programs, and leadership development programs for new and first-time managers. These programs are designed to build technical, professional, and leadership capabilities, with training in areas such as coaching, performance management, employee relations, and compliance-related responsibilities. These development programs, combined with our strong culture, increasingly results in our employees stepping into larger roles within the organization.

Talent Acquisition & Compensation

We focus on attracting, developing and retaining talent that supports our short and long-term goals as an organization. Our "talent anywhere" approach enables us to recruit qualified employees regardless of geographic location. We seek individuals who align with our values, demonstrate a commitment to learning and development, and contribute perspectives that support innovation and business performance.

Our compensation philosophy is designed to attract and retain talent through competitive, equitable, and market-based compensation programs. Total rewards include base compensation, equity-based awards, an employee stock purchase program, retirement benefits, paid time off, and many other employee benefits. We also provide employees with access to earned wages before the end of the payroll cycle through our On Demand Payment product, as well as financial wellness resources. We utilize market data and industry benchmarking to help inform our compensation practices.

We are also committed to supporting the health and well-being of our employees through a broad range of benefit programs and resources. In addition to traditional health and welfare benefits, we also offer employees benefits such as paid parental leave, adoption assistance, health advocacy services, volunteer time off, tuition reimbursement, mental health support, fertility treatment, family planning services and many others.

PCTY Gives

Through our PCTY Gives program, we support charitable organizations and communities through employee volunteerism, charitable contributions, grant programs, and other community-focused initiatives. Our Elevate Your Passions program provides donations to nonprofit organizations nominated by employees. In addition to supporting local charities, we partner with national organizations, including Girls Who Code, the American Red Cross, and the National Alliance on Mental Illness. To support the dependents of Paylocity employees, the Peter J. McGrail Scholarship Program provides higher education tuition assistance for selected recipients.

Available Information

Our Internet address is www.paylocity.com and our investor relations website is located at http://investors.paylocity.com. We make available free of charge on our investor relations website under the heading “Financials” our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports as soon as reasonably practicable after such materials are electronically filed with (or furnished to) the SEC. Information contained on our websites is not incorporated by reference into this Annual Report on Form 10-K. In addition, the SEC maintains an Internet site, www.sec.gov, that includes filings of and information about issuers that file electronically with the SEC.