- In an article now out of embargo, David Hernandez observes Paylocty (PCTY +3.1%) has posted a 40% revenue CAGR over its last 4 fiscal year, thanks in large part to the ability of its cloud payroll software to take share from traditional payroll outsourcing providers such as ADP and Paychex (NASDAQ:PAYX).
- He notes Paylocity CEO Steve Beauchamp declared on a May CC (transcript) "more than 50% of our new business" comes from displacing traditional payroll outsources, while adding "ADP and Paychex would be the two most common providers in that space."
- ADP has rolled out its own cloud payroll offerings in an attempt to counter upstarts such as Paylocity. Paychex bought online payroll service provider SurePayroll in 2011.
- Though admitting ADP and Ultimate Software are beginning to provide tougher competition in Paylocity's midmarket niche, Hernandez still sees plenty of room for growth in the near-term, given the company has penetrated less than 2% of the midmarket (estimated to have 656K organizations as of 2010).