Capex rose 176.5%. That is the oddest number in Paylocity’s new annual report, and it arrives in a year when the software company looked increasingly efficient everywhere else.
Revenue grew 11.0% to $1.8 billion in the twelve months ended June 30, 2026. Operating income rose 27.0% to $386.0 million, lifting operating margin to 21.8%, while operating cash flow climbed 27.5% to $533.3 million. The surface reading is straightforward: Paylocity is growing at a moderate clip and converting that growth into profit faster.
Then the cash picture gets less tidy. Cash fell 31.7% to $271.9 million, accounts receivable rose 20.3% to $50.1 million, and capital spending nearly tripled to $36.2 million. Free cash flow still reached 28.1% of revenue, up from 25.4% a year earlier, but the balance-sheet cash number did not follow the operating cash number upward.
Management attributes the operating cash increase to better results, non-cash adjustments, and lower income-tax payments tied to the One Big Beautiful Bill Act. It also says changes in operating assets and liabilities partly offset those benefits.
"The change in net cash provided by operating activities from fiscal 2025 to fiscal 2026 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 lower income tax payments resulting from the provisions of the One Big Beautiful Bill Act, partially offset by changes in operating assets and liabilities over the same period."
Paylocity, Form 10-K, Aug. 5, 2026
That makes the cash-flow improvement a combination of stronger operations and a tax-related tailwind, rather than a single clean operating signal. The company does not disclose what caused the capex increase.
The cash balance also includes the timing effects of money Paylocity collects for clients and remits to employees, authorities, and vendors. That matters because the financing line moved with those obligations, not just with Paylocity’s own spending.
"The change in net cash provided by (used in) financing activities from fiscal 2025 to fiscal 2026 was primarily due to the net change in client fund obligations of $812.1 million due to the timing of client funds collected and related remittance of those funds to client employees, taxing and other regulatory authorities and vendors and an $81.3 million increase in credit facility repayments during the year ended June 30, 2025 as compared to the current year."
Paylocity, Form 10-K, Aug. 5, 2026
In plain English, the lower cash balance is not a simple readout of weaker cash generation. Client-fund timing can move the balance materially, while the company spent more on capital investments and produced more operating cash. Those are separate currents in the same statement, which is accounting’s way of making a good year require a decoder ring.
The broader trajectory adds a useful reference point. Revenue growth has slowed from 14.8% in fiscal 2025 to 11.0% in fiscal 2026, but operating margin expanded from 20.7% to 21.8%. Paylocity also reduced diluted shares 3.1%, to 54.8 million, helping diluted EPS rise 22.4% to 4.92.
At the latest close, shares were $142.94, and the company carried $235.6 million of net cash. The unresolved item is not whether Paylocity generated operating cash this year; it is what the next quarterly report says about capital spending after the full-year figure reached $36.2 million.
Source: Paylocity’s Form 10-K filed Aug. 5, 2026, which reports $36.2 million in fiscal 2026 capex.