Paylocity (NASDAQ: PCTY), a leader in cloud-based HR and payroll software solutions, today announced it has signed a definitive agreement to acquire Airbase Inc., a modern finance and spend management software solution that combines bill pay/accounts payable automation, expense management, corporate cards and procurement capabilities.
The acquisition of Airbase represents an expansion of Paylocity’s suite and will deliver incremental integrated value to HR and finance leaders in managing all of their spend on a single platform - expanding the Paylocity total addressable market beyond HCM and further into the Office of the CFO.
The integration of Airbase‘s finance solutions with Paylocity’s HCM platform, is expected to create a significant opportunity to provide companies with a differentiated and unified experience across HCM and Finance solutions. The ability for companies to see payroll and non-payroll spend through a single pane of glass allows for real-time visibility, faster financial close, improved planning and stronger financial controls, and will represent a key differentiator for Paylocity.
“I’m very excited about the acquisition of Airbase, which we believe will allow us to provide companies with an integrated software platform to manage all aspects of their operational spend. Many companies use disparate software solutions or manual processes to manage their labor costs and non-labor vendor and procurement spend, and we expect this acquisition will give us the ability to provide a comprehensive solution and modern client experience for managing all spend on a single integrated platform. Airbase represents an exciting opportunity to expand our relationship with our nearly 40,000 clients to offer an integrated software platform for running their business operations, while also offering a very compelling value proposition for prospects across our target market,” said Toby Williams, President and CEO of Paylocity.
Airbase’s spend management platform includes the following key products and capabilities:
Bill Pay/Accounts Payable Automation: Automated invoice processing and purchase order matching, routing for approval and payment via ACH, virtual card, check or wire transfer
Expense Management: Proactively request, approve and reconcile expenses via web or mobile app with real-time reimbursements
Corporate Cards: Provision and deprovision ‘smart’ physical and virtual cards with pre-built spend controls and approval workflows
Procurement: Automated procurement processes and tracking to maximize efficiency with real-time visibility and control over procure-to-pay processes
Integration Ecosystem: Robust set of integrations with key third-party systems including core ERP/General Ledger providers such as Oracle NetSuite, Sage Intacct, and QuickBooks
Workflow Automation: Integrated and connected workflows across key spend and business process systems supported by a flexible and intuitive approvals engine
Airbase was founded in 2017, is headquartered in San Francisco, and has approximately 300 employees in the United States, Canada, India and the Philippines. Its modern finance and spend management software solution is focused on the 100 - 5,000 employee segment of the market, with more than 500 clients with an average of over 200 employees.
Financial Details
The approximately $325 million acquisition of Airbase, subject to customary adjustments, will be funded by borrowings under its revolving credit facility and is not expected to impact the Company’s ability to execute on the remaining $350 million authorization under its share repurchase program. As of June 30, 2024, Paylocity had $401.8 million of cash and cash equivalents on its balance sheet.
Subject to customary closing conditions and necessary regulatory approvals, the transaction is expected to close in the first or second quarter of fiscal 2025.
The acquisition of Airbase is expected to represent approximately 1% of total revenue in fiscal 2025 and is expected to dilute adjusted EBITDA margin by approximately 100 basis points in fiscal 2025. Paylocity will update financial guidance in the normal course of business in their first quarter fiscal 2025 earnings release.