Paylocity, a notable provider of cloud-based HR and payroll software, has announced its definitive agreement to purchase Airbase.
Airbase stands out with its modern finance and spend management software that integrates bill pay, accounts payable automation, expense management, corporate cards, and procurement features.
The acquisition, valued at approximately $325 million, aims to expand Paylocity’s offerings, introducing significant enhancements to its suite of services. This strategic move is set to increase the integrated value provided to HR and finance leaders by consolidating all spending aspects onto a single platform. The expansion targets broadening Paylocity’s reach beyond Human Capital Management (HCM) into the Office of the CFO.
Paylocity and Airbase detail their core operations as focusing on human resources and financial management, respectively. Paylocity is renowned for its comprehensive HR solutions, while Airbase excels in automating and streamlining financial operations across multiple functions, from bill payments to procurement.
Further insights into the acquisition reveal a unified vision. Integrating Airbase’s financial solutions with Paylocity’s HCM platform is expected to offer a unique, consolidated view of both payroll and non-payroll expenses. This integration promises real-time visibility, accelerated financial closings, enhanced planning, and robust financial controls, which are anticipated to be key differentiators for Paylocity in the market.
Additional details include Airbase’s product offerings such as automated invoice processing, expense management through web and mobile interfaces, smart corporate cards with built-in controls, and automated procurement processes. These features are supported by a robust integration ecosystem with major ERP providers like Oracle NetSuite, Sage Intacct, and QuickBooks.
Founded in 2017 and based in San Francisco, Airbase has grown to employ around 300 staff across the U.S., Canada, India, and the Philippines. The company currently serves over 500 clients, primarily in the 100 – 5,000 employee segment.
Regarding financial specifics, the acquisition’s funding will be covered by borrowings under Paylocity’s revolving credit facility. It is not expected to affect the company’s ongoing $350 million share repurchase program. With a cash reserve of $401.8 million as of June 30, 2024, Paylocity anticipates the acquisition will contribute about 1% to its total revenue in fiscal 2025 but also expects a 100 basis point dilution in its adjusted EBITDA margin for the same period.
The transaction, awaiting customary closing conditions and necessary regulatory approvals, is slated for completion in the first or second quarter of fiscal 2025.
Paylocity CEO Toby Williams commented, “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.”
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