Investor Sells Off SaaS Stock Down 43% This Past Year Despite $1.7 Billion Revenue Guidance

Sone Capital Management disclosed a sale of 162,022 Paylocity (NASDAQ:PCTY) shares, with an estimated transaction value of $24.11 million based on quarterly average pricing, per a February 17, 2026, SEC filing.

What happened

Sone Capital Management reduced its position in Paylocity (NASDAQ:PCTY) by 162,022 shares during the fourth quarter of 2025, according to an SEC filing dated February 17, 2026. The estimated transaction value was $24.11 million, calculated using the average closing price for the quarter. As a result, the firm held 33,279 shares worth $5.08 million at year-end. The net position change, accounting for both trading and price movements, was a $26.03 million decrease.

What else to know

• This was a sell, leaving Paylocity at 0.41% of Sone Capital’s 13F reportable AUM.
• Top holdings after the filing:
  • NASDAQ: FOX: $44.97 million (3.6% of AUM)
  • NYSE: UNP: $35.66 million (2.9% of AUM)
  • NYSE: OTIS: $34.56 million (2.8% of AUM)
  • NASDAQ: AMZN: $32.15 million (2.6% of AUM)
  • NYSE: ALLE: $31.57 million (2.6% of AUM)
• As of Thursday, shares were priced at $112.81, down 43% over the past year and well underperforming the S&P 500, which is instead up about 16% in the same period.

Company overview

Company snapshot

• Paylocity provides cloud-based human capital management and payroll software solutions, including payroll processing, HR management, talent management, time and attendance, and employee experience tools.
• The firm serves for-profit and non-profit organizations across sectors such as business services, healthcare, manufacturing, retail, technology, and more in the United States.
• It leverages a subscription-driven model to ensure predictable revenue and strong client retention.

Paylocity is a leading provider of cloud-based payroll and human capital management software, delivering scalable solutions to streamline HR and workforce operations. Its comprehensive platform and industry focus position it competitively within the U.S. SaaS HR technology market.

What this transaction means for investors

Though its stock’s recent performance might suggest otherwise, Paylocity is still doing a lot right operationally. Revenue continues to climb at a healthy clip, with fiscal 2026 guidance pointing to roughly $1.7 billion in revenue, up 9% year over year, amid steady margin expansion. Meanwhile, recurring revenue remains the backbone of the business, and client retention is strong. On paper, this is exactly the kind of predictable SaaS model investors have historically rewarded.

But the market has been punishing software stocks, making growth alone no longer enough when valuation and margin durability are under scrutiny. Paylocity shares have been cut nearly in half over the past year, even as the business kept expanding, which tells you this is more about multiple compression than a broken company.

More broadly across the portfolio, the largest positions lean toward industrials, infrastructure, and durable cash-flow names. Ultimately, this sale seemingly trims exposure to a higher-multiple software company that still needs to prove it can translate growth into consistently expanding profits.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Paylocity. The Motley Fool recommends Otis Worldwide and Union Pacific. The Motley Fool has a disclosure policy.