Site icon Wall Street Business News

Paycor Announces First Quarter Fiscal Year 2025 Financial Results

ws_admin

CINCINNATI, Nov. 06, 2024 (GLOBE NEWSWIRE) — Paycor HCM, Inc. (Nasdaq: PYCR) (“Paycor”), a leading provider of human capital management (“HCM”) software, today announced financial results for the first quarter fiscal year 2025, which ended September 30, 2024.

“Paycor had an impressive start to the year, delivering 17% revenue growth year-over-year,” said Raul Villar, Jr., Chief Executive Officer of Paycor. “Our continued success is a testament to the strength of our award-winning HCM solution, which empowers leaders to drive tangible business results through connectivity with people, data, and expertise.”

“We continued to pragmatically invest in sales and product expansion to fuel future growth while demonstrating the scalability of our business model with significant margin and free cash flow expansion. We remain confident in our ability to deliver attractive growth and significantly higher operating leverage over the longer-term.”

First Quarter Fiscal Year 2025 Financial Highlights

*Adjusted operating income, adjusted net income and adjusted free cash flow are non-GAAP financial measures. Please see the discussion below under the heading “Non-GAAP Financial Measures” and the reconciliations at the end of this press release for information concerning these and other non-GAAP financial measures referenced in this press release.

First Quarter and Recent Business Highlights

Business Outlook

Based on information as of today, November 6, 2024, Paycor is issuing the following financial guidance:

Second Quarter Ending December 31, 2024:

Fiscal Year Ending June 30, 2025:

*We are unable to reconcile forward-looking adjusted operating income to forward-looking income (loss) from operations, the most closely comparable GAAP financial measure, because the information needed to provide a complete reconciliation is unavailable at this time without unreasonable effort.

Conference Call Information

Paycor will host a conference call today, November 6, 2024, at 5:00 p.m. Eastern Time to discuss its financial results and guidance. To access this call, dial 1-877-407-4018 (domestic) or 1-201-689-8471 (international). The access code is 13748589. A live webcast and replay of the event will be available on the Paycor Investor Relations website at investors.paycor.com.

About Paycor

Paycor’s HR, payroll, and talent platform connects leaders to people, data, and expertise. We help leaders drive engagement and retention by giving them tools to coach, develop, and grow employees. We give them unprecedented insights into their operational data with a unified HCM experience that can seamlessly connect to other mission-critical technology. By providing expert guidance and consultation, we help them achieve business results and become an extension of their teams. Learn more at paycor.com.​

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact, including statements regarding our future results of operations and financial position, our business outlook, our business strategy and plans, our objectives for future operations, and any statements of a general economic or industry specific nature, are forward-looking statements. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “can have,” “likely,” “outlook,” “potential,” “targets,” “contemplates,” or the negative or plural of these words and similar expressions are intended to identify forward-looking statements.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in our most recent Annual Report on Form 10-K, as well as in our other filings with the Securities and Exchange Commission. We believe that these risks include, but are not limited to: our ability to manage our growth effectively; the potential unauthorized access to our customers’ or their employees’ personal data as a result of a breach of our or our vendors’ security measures; the expansion and retention of our direct sales force with qualified and productive persons and the related effects on the growth of our business; the impact on customer expansion and retention if implementation, user experience, customer service, or performance relating to our solutions is not satisfactory; the timing of payments made to employees and taxing authorities relative to the timing of when a customer’s electronic funds transfers are settled to our account; future acquisitions of other companies’ businesses, technologies, or customer portfolios; the continued service of our key executives; our ability to innovate and deliver high-quality, technologically advanced products and services; risks specifically associated with our development and use of artificial intelligence in our solutions; our ability to attract and retain qualified personnel; the proper operation of our software; our relationships with third parties that provide financial and other functionality integrated into our HCM platform; the extent to which negative macroeconomic conditions persist or worsen in the markets in which we or our customers operate; and the impact of an economic downturn or recession in the United States or global economy. You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations and assumptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We undertake no obligation to publicly update any forward-looking statement after the date of this report, whether as a result of new information, future developments or otherwise, or to conform these statements to actual results or revised expectations, except as may be required by law.

Non-GAAP Financial Measures

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we present the following non-GAAP financial measures in this press release and on the related teleconference call: adjusted gross profit, adjusted gross profit margin, adjusted operating income, adjusted operating income margin, adjusted sales and marketing expense, adjusted general and administrative expense, adjusted research and development expense, adjusted net income, adjusted net income per share, adjusted free cash flow and adjusted free cash flow margin. Management believes these non-GAAP measures are useful in evaluating our core operating performance and trends to prepare and approve our annual budget, and to develop short-term and long-term operating plans. Management believes that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. We define (i) adjusted gross profit as gross profit before amortization of intangible assets and stock-based compensation expense, in each case that are included in costs of revenues, (ii) adjusted gross profit margin as adjusted gross profit divided by total revenues, (iii) adjusted operating income as income (loss) from operations before amortization of acquired intangible assets and naming rights, stock-based compensation expense, exit costs due to exiting leases of certain facilities and other certain corporate expenses, such as costs related to secondary offerings, professional, consulting and other costs and acquisition costs, (iv) adjusted operating income margin as adjusted operating income divided by total revenues, (v) adjusted sales and marketing expense as sales and marketing expenses before amortization of naming rights and stock-based compensation expense, (vi) adjusted general and administrative expense as general and administrative expenses before amortization of acquired intangible assets, stock-based compensation expense, exit costs due to exiting leases of certain facilities and other certain corporate expenses, such as costs related to secondary offerings, professional, consulting and other costs and acquisition costs, (vii) adjusted research and development expense as research and development expenses before stock-based compensation expense, (viii) adjusted net income as income (loss) before expense (benefit) for income taxes after adjusting for amortization of acquired intangible assets and naming rights, accretion expense associated with the naming rights, change in fair value of contingent consideration, stock-based compensation expense, exit costs due to exiting leases of certain facilities and other certain corporate expenses, such as costs related to secondary offerings, professional, consulting and other costs and acquisition costs, all of which are tax effected by applying an adjusted effective income tax rate, (ix) adjusted net income per share as adjusted net income divided by adjusted shares outstanding, which includes potentially dilutive securities excluded from the GAAP dilutive net income (loss) per share calculation, (x) adjusted free cash flow as cash provided (used) by operating activities less the purchase of property and equipment and internally developed software costs, excluding other certain corporate expenses, which are included in cash provided (used) by operating activities and (xi) adjusted free cash flow margin as adjusted free cash flow divided by total revenues.

The non-GAAP financial measures presented in this press release and discussed on the related teleconference call are not measures of financial performance under GAAP and should not be considered a substitute for gross profit, gross margin, income (loss) from operations, operating income margin, sales and marketing expense, general and administrative expense, research and development expense, net income (loss), diluted net income (loss) per share and cash provided (used) by operating activities. Non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. The non-GAAP financial measures that we present may not be comparable to similarly titled measures used by other companies. A reconciliation is provided below under “Reconciliations of Non-GAAP Measures to GAAP Measures,” for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP.

Investor Relations:
Rachel White
513-954-7388
IR@paycor.com

Media Relations:
Carly Pennekamp
513-954-7282
PR@paycor.com

 
Paycor HCM, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
 
  September 30,
2024		   June 30,
2024
Assets (Unaudited)    
Current assets:      
Cash and cash equivalents $ 97,618     $ 117,958  
Accounts receivable, net allowance for credit losses   47,957       48,164  
Deferred contract costs   73,128       70,377  
Prepaid expenses   14,693       12,749  
Other current assets   8,673       3,458  
Current assets before funds held for clients   242,069       252,706  
Funds held for clients   967,189       1,109,136  
Total current assets   1,209,258       1,361,842  
Property and equipment, net   34,871       35,220  
Operating lease right-of-use assets   14,021       14,417  
Goodwill   766,832       766,653  
Intangible assets, net   147,925       171,493  
Capitalized software, net   70,173       67,376  
Long-term deferred contract costs   194,941       189,826  
Other long-term assets   2,853       2,566  
Total assets $ 2,440,874     $ 2,609,393  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 20,419     $ 27,309  
Accrued expenses and other current liabilities   29,535       26,450  
Accrued payroll and payroll related expenses   22,006       44,923  
Deferred revenue   13,124       13,600  
Current liabilities before client fund obligations   85,084       112,282  
Client fund obligations   963,998       1,111,373  
Total current liabilities   1,049,082       1,223,655  
Deferred income taxes   11,197       16,019  
Long-term operating leases   12,653       13,447  
Other long-term liabilities   68,309       69,346  
Total liabilities   1,141,241       1,322,467  
Commitments and contingencies      
Stockholders’ equity:      
Common stock $0.001 par value per share, 500,000,000 shares authorized, 178,821,615 shares outstanding at September 30, 2024 and 178,210,263 shares outstanding at June 30, 2024   179       178  
Treasury stock, at cost, 10,620,260 shares at September 30, 2024 and June 30, 2024   (245,074 )     (245,074 )
Preferred stock, $0.001 par value, 50,000,000 shares authorized, — shares outstanding at September 30, 2024 and June 30, 2024   —       —  
Additional paid-in capital   2,097,454       2,081,668  
Accumulated deficit   (555,721 )     (548,437 )
Accumulated other comprehensive income (loss)   2,795       (1,409 )
Total stockholders’ equity   1,299,633       1,286,926  
Total liabilities and stockholders’ equity $ 2,440,874     $ 2,609,393  
 
 
Paycor HCM, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share amounts)
 
  Three Months Ended
  September 30,
    2024       2023  
Revenues:      
Recurring and other revenue $ 153,999     $ 132,708  
Interest income on funds held for clients   13,477       10,880  
Total revenues   167,476       143,588  
Cost of revenues   59,217       51,378  
Gross profit   108,259       92,210  
Operating expenses:      
Sales and marketing   56,789       52,778  
General and administrative   48,296       48,749  
Research and development   17,428       14,055  
Total operating expenses   122,513       115,582  
Loss from operations   (14,254 )     (23,372 )
Other (expense) income:      
Interest expense   (1,138 )     (1,244 )
Other   1,670       931  
Loss before benefit for income taxes   (13,722 )     (23,685 )
Income tax benefit   (6,438 )     (3,089 )
Net loss $ (7,284 )   $ (20,596 )
Basic and diluted net loss per share $ (0.04 )   $ (0.12 )
Weighted average common shares outstanding:      
Basic and diluted   178,729,710       176,953,395  
 

 

 
Paycor HCM, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 
  Three Months Ended
  September 30,
    2024       2023  
Cash flows from operating activities:      
Net loss $ (7,284 )   $ (20,596 )
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation   1,451       1,511  
Amortization of intangible assets and software   34,341       34,183  
Amortization of deferred contract costs   18,834       14,366  
Stock-based compensation expense   12,665       12,915  
Deferred tax benefit   (6,795 )     (3,098 )
Bad debt expense   730       1,291  
Loss on sale of investments   83       61  
(Gain) loss on foreign currency exchange   (52 )     184  
Loss (gain) on lease exit   6       (144 )
Naming rights accretion expense   1,006       1,030  
Change in fair value of deferred consideration   (112 )     —  
Other   23       23  
Changes in assets and liabilities, net of effects from acquisitions:      
Accounts receivable   (478 )     (5,228 )
Prepaid expenses and other assets   (6,641 )     (6,393 )
Accounts payable   (6,848 )     (7,877 )
Accrued liabilities and other   (21,914 )     (21,314 )
Deferred revenue   (626 )     43  
Deferred contract costs   (26,700 )     (27,086 )
Net cash used in operating activities   (8,311 )     (26,129 )
Cash flows from investing activities:      
Purchases of client funds available-for-sale securities   (83,244 )     (22,542 )
Proceeds from sale and maturities of client funds available-for-sale securities   78,135       23,652  
Purchase of property and equipment   (1,169 )     (1,435 )
Acquisition of intangible assets   (127 )     (12 )
Internally developed software costs   (13,441 )     (13,254 )
Net cash used in investing activities   (19,846 )     (13,591 )
Cash flows from financing activities:      
Net change in cash and cash equivalents held to satisfy client funds obligations   (145,984 )     (16,270 )
Payment of capital expenditure financing   —       (3,689 )
Repayments of debt and finance lease obligations   (297 )     (266 )
Withholding taxes paid related to net share settlements   (323 )     (418 )
Proceeds from employee stock purchase plan   3,444       4,172  
Net cash used in financing activities   (143,160 )     (16,471 )
Impact of foreign exchange on cash and cash equivalents   (2 )     1  
Net change in cash, cash equivalents, restricted cash and short-term investments, and funds held for clients   (171,319 )     (56,190 )
Cash, cash equivalents, restricted cash and short-term investments, and funds held for clients, beginning of period   910,580       879,046  
Cash, cash equivalents, restricted cash and short-term investments, and funds held for clients, end of period $ 739,261     $ 822,856  
Supplemental disclosure of non-cash investing, financing and other cash flow information:      
Capital expenditures in accounts payable $ 12     $ 11  
Cash paid for interest $ —     $ 145  
Capital lease asset obtained in exchange for capital lease liabilities $ —       3,393  
Reconciliation of cash, cash equivalents, restricted cash and short-term investments, and funds held for clients to the Consolidated Balance Sheets      
Cash and cash equivalents $ 97,618     $ 54,277  
Funds held for clients   641,643       768,579  
Total cash, cash equivalents, restricted cash and short-term investments, and funds held for clients $ 739,261     $ 822,856  
 
 
Reconciliations of Non-GAAP Measures to GAAP Measures
 
Adjusted Gross Profit and Adjusted Gross Profit Margin (Unaudited)
 
  Three Months Ended
(in thousands) September 30,
2024		   September 30,
2023
Gross Profit* $ 108,259     $ 92,210  
Gross Profit Margin   64.6 %     64.2 %
Amortization of intangible assets   875       1,375  
Stock-based compensation expense   1,502       1,595  
Corporate adjustments   21       —  
Adjusted Gross Profit* $ 110,657     $ 95,180  
Adjusted Gross Profit Margin   66.1 %     66.3 %
 
*   Gross Profit and Adjusted Gross Profit are burdened by depreciation expense of $0.6 million for both the three months ended September 30, 2024 and 2023, respectively. Gross Profit and Adjusted Gross Profit are burdened by amortization of capitalized software of $10.6 million and $8.5 million for the three months ended September 30, 2024 and 2023, respectively. Gross Profit and Adjusted Gross Profit are burdened by amortization of deferred contract costs of $10.8 million and $8.1 million for the three months ended September 30, 2024 and 2023, respectively.
     

Adjusted Operating Income (Unaudited)

  Three Months Ended
(in thousands) September 30,
2024		   September 30,
2023
Loss from Operations $ (14,254 )   $ (23,372 )
Operating Margin   (8.5 )%   (16.3 )%
Amortization of intangible assets   23,696       25,710  
Stock-based compensation expense   12,665       12,915  
Loss (gain) on lease exit*   6       (144 )
Corporate adjustments**   687       811  
Adjusted Operating Income $ 22,800     $ 15,920  
Adjusted Operating Income Margin   13.6 %     11.1 %
 
*   Represents exit costs due to exiting leases of certain facilities.
**   Corporate adjustments for the three months ended September 30, 2024 relate to professional, consulting, and other costs associated with strategic initiatives of $0.7 million. Corporate adjustments for the three months ended September 30, 2023 relate to professional, consulting, and other costs associated with strategic initiatives of $0.8 million.
   

Adjusted Operating Expenses (Unaudited)

  Three Months Ended
(in thousands) September 30,
2024		   September 30,
2023
Sales and Marketing expenses $ 56,789     $ 52,778  
Amortization of intangible assets   (1,059 )     (1,059 )
Stock-based compensation expense   (4,185 )     (4,318 )
Adjusted Sales and Marketing expenses $ 51,545     $ 47,401  
General and Administrative expenses $ 48,296     $ 48,749  
Amortization of intangible assets   (21,762 )     (23,276 )
Stock-based compensation expense   (4,786 )     (5,072 )
(Loss) gain on lease exit*   (6 )     144  
Corporate adjustments**   (666 )     (811 )
Adjusted General and Administrative expenses $ 21,076     $ 19,734  
Research and Development expenses $ 17,428     $ 14,055  
Stock-based compensation expense   (2,192 )     (1,930 )
Adjusted Research and Development expenses $ 15,236     $ 12,125  
 
*   Represents exit costs due to exiting leases of certain facilities.
**   Corporate adjustments for the three months ended September 30, 2024 relate to professional, consulting, and other costs associated with strategic initiatives of $0.7 million. Corporate adjustments for the three months ended September 30, 2023 relate to professional, consulting, and other costs associated with strategic initiatives of $0.8 million.
 

Adjusted Net Income Attributable to Paycor HCM, Inc. and Adjusted Net Income Attributable to Paycor HCM, Inc. Per Share (Unaudited)

  Three Months Ended
(in thousands) September 30,
2024		   September 30,
2023
Net loss before benefit for income taxes $ (13,722 )   $ (23,685 )
Amortization of intangible assets   23,696       25,710  
Naming rights accretion expense   1,006       1,030  
Change in fair value of contingent consideration   (112 )     —  
Stock-based compensation expense   12,665       12,915  
Loss (gain) on lease exit*   6       (144 )
Corporate adjustments**   687       811  
Non-GAAP adjusted income before applicable income taxes   24,226       16,637  
Income tax effect on adjustments***   (5,572 )     (3,827 )
Adjusted Net Income Attributable to Paycor HCM, Inc. $ 18,654     $ 12,810  
       
Adjusted Net Income Attributable to Paycor HCM, Inc. Per Share $ 0.10     $ 0.07  
Adjusted shares outstanding****   177,912,794       177,334,568  
 
*   Represents exit costs due to exiting leases of certain facilities.
**   Corporate adjustments for the three months ended September 30, 2024 relate to professional, consulting, and other costs associated with strategic initiatives of $0.7 million. Corporate adjustments for the three months ended September 30, 2023 relate to professional, consulting, and other costs associated with strategic initiatives of $0.8 million.
***   Non-GAAP adjusted income before applicable income taxes is tax effected using an adjusted effective income tax rate of 23.0% for both of the three months ended September 30, 2024 and 2023.
****   Adjusted shares outstanding for both the three months ended September 30, 2024 and 2023 are based on the if-converted method and include potentially dilutive securities that are excluded from the U.S. GAAP dilutive net income per share calculation because including them in the computation of net income per share would have had an anti-dilutive effect.
     

Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin (Unaudited)

  Three Months Ended
(in thousands) September 30,
2024		   September 30,
2023
Net cash used in operating activities $ (8,311 )   $ (26,129 )
Purchase of property and equipment   (1,169 )     (1,435 )
Internally developed software costs   (13,441 )     (13,254 )
Corporate adjustments*   687       811  
Adjusted Free Cash Flow $ (22,234 )   $ (40,007 )
Adjusted Free Cash Flow Margin (13.3 )%   (27.9 )%
 
*   Corporate adjustments for the three months ended September 30, 2024 relate to professional, consulting, and other costs associated with strategic initiatives of $0.7 million. Corporate adjustments for the three months ended September 30, 2023 relate to professional, consulting, and other costs associated with strategic initiatives of $0.8 million.


Wall St Business News, Latest and Up-to-date Business Stories from Newsmakers of Tomorrow