PAYCOR HCM, INC. - Q1 Total revenue of $118.3 million, an increase of 28% year-over-year, while delivering increased profitability
- Q1 Recurring revenue of $114.2 million, an increase of 24% year-over-year, driven by continued strong demand
- Raises FY’23 revenue guidance to
$528-$534 million , an increase of 24% year-over-year at the top end of the range
“Paycor posted robust revenue growth of 28% year-over-year, driven by strong new client growth, cross-sales, and continued PEPM expansion,” said
“We are thrilled to have acquired Talenya’s intelligent candidate sourcing technology to further enhance our industry-leading talent solution and deliver on our mission to empower leaders to build winning teams. This acquisition builds on our successful track record of rapidly integrating best-in-class point solutions that provide a competitive advantage and expand our PEPM opportunity.”
First Quarter Fiscal Year 2023 Financial Highlights
- Total revenue was
$118.3 million , compared to$92.7 million for the first quarter of fiscal year 2022. - Operating loss was
$33.4 million , compared to$52.3 million for the first quarter of fiscal year 2022. - Adjusted operating income* was
$10.4 million , compared to$3.4 million for the first quarter of fiscal year 2022. - Net loss attributable to
Paycor HCM was$29.1 million , compared to$53.7 million for the first quarter of fiscal year 2022. - Adjusted net income attributable to
Paycor HCM* was$8.2 million , compared to$2.3 million for the first quarter of fiscal year 2022.
*Adjusted operating income and adjusted net income attributable to
First Quarter and Recent Business Highlights
- Acquired Talenya, a proprietary, AI-powered recruiting platform that makes it easier for frontline leaders to find skilled and diverse talent faster and at a significantly lower cost. The award-winning technology will enhance our industry-leading talent solution by sourcing active as well as passive candidates and by placing an emphasis on diverse candidates that are often overlooked by traditional recruiting systems.
- Introduced the COR Leadership Framework, empowering organizations to transform frontline managers into effective leaders through the provision of technology and expertise. Based on decades of research, the framework is built on the understanding that the most effective leaders focus on coaching employees, optimizing performance and retaining top talent.
- Published inaugural Environmental, Social and Governance (“ESG”) Report, describing the Company's commitment to sustainable business practices and ongoing efforts to address material ESG topics. Significant progress was made in fiscal 2022 to reduce greenhouse gas emissions and increase the representation of females in leadership and ethnic diversity among associates.
- Won 2022 Top Workplaces Culture Excellence Awards in Diversity, Equity and Inclusion (DE&I) Practices, Innovation, and Compensation & Benefits Categories by Energage. Over the past fiscal year,
Paycor has continued to advance its DE&I strategy, enhance associate rewards, expand benefit options, and drive innovation.
Business Outlook
Based on information as of today,
Second Quarter Ending
- Total revenue in the range of
$126-$128 million . - Adjusted operating income* in the range of
$12.5-$13.5 million .
Fiscal Year Ending
- Total revenue in the range of
$528-$534 million . - Adjusted operating income* in the range of
$65-$68 million .
*We are unable to reconcile forward-looking adjusted operating income to forward-looking 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
About
Paycor’s human capital management (HCM) platform modernizes every aspect of people management, from recruiting, onboarding, and payroll to career development and retention, but what really sets us apart is our focus on leaders. For more than 30 years, we’ve been listening to and partnering with leaders, so we know what they need; a unified HR platform, easy integration with third party apps, powerful analytics, talent development software, and configurable technology that supports specific industry needs. That’s why more than 29,000 customers trust
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 Annual Report on Form 10-K for the fiscal year ended
Non-GAAP Financial Measures
To supplement our financial information presented in accordance with generally accepted accounting principles in
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, operating income, operating income margin, sales and marketing expense, general and administrative expense, research and development expense, net income attributable to
Investor Relations:
513-954-7388
IR@paycor.com
Media Relations:
513-954-7282
PR@paycor.com
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
2022 | 2022 | |||||||
| Assets | (Unaudited) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 98,161 | $ | 133,041 | ||||
| Accounts receivable, net | 23,359 | 21,511 | ||||||
| Deferred contract costs | 41,398 | 37,769 | ||||||
| Prepaid expenses | 10,954 | 9,421 | ||||||
| Other current assets | 2,490 | 1,874 | ||||||
| Current assets before funds held for clients | 176,362 | 203,616 | ||||||
| Funds held for clients | 933,307 | 1,715,916 | ||||||
| Total current assets | 1,109,669 | 1,919,532 | ||||||
| Property and equipment, net | 30,789 | 31,675 | ||||||
| Operating lease right-of-use assets | 22,732 | — | ||||||
| 749,221 | 750,155 | |||||||
| Intangible assets, net | 322,645 | 263,069 | ||||||
| Capitalized software, net | 42,696 | 40,002 | ||||||
| Long-term deferred contract costs | 133,818 | 125,705 | ||||||
| Other long-term assets | 1,662 | 1,179 | ||||||
| Total assets | $ | 2,413,232 | $ | 3,131,317 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 15,512 | $ | 13,945 | ||||
| Accrued expenses and other current liabilities | 18,837 | 13,907 | ||||||
| Accrued payroll and payroll related expenses | 25,873 | 44,592 | ||||||
| Deferred revenue | 11,333 | 11,742 | ||||||
| Current liabilities before client fund obligations | 71,555 | 84,186 | ||||||
| Client fund obligations | 938,836 | 1,719,047 | ||||||
| Total current liabilities | 1,010,391 | 1,803,233 | ||||||
| Deferred income taxes | 26,222 | 31,895 | ||||||
| Long-term operating leases | 23,180 | — | ||||||
| Other long-term liabilities | 79,580 | 11,458 | ||||||
| Total liabilities | 1,139,373 | 1,846,586 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Common stock | 176 | 175 | ||||||
| (245,074 | ) | (245,074 | ) | |||||
| Preferred stock, | — | — | ||||||
| Additional paid-in capital | 1,947,102 | 1,926,800 | ||||||
| Accumulated deficit | (424,441 | ) | (395,389 | ) | ||||
| Accumulated other comprehensive loss | (3,904 | ) | (1,781 | ) | ||||
| Total stockholders' equity | 1,273,859 | 1,284,731 | ||||||
| Total liabilities and stockholders' equity | $ | 2,413,232 | $ | 3,131,317 | ||||
| Condensed Consolidated Statements of Operations (Unaudited) | ||||||||
| (in thousands, except share amounts) | ||||||||
| Three Months Ended | ||||||||
| 2022 | 2021 | |||||||
| Revenues: | ||||||||
| Recurring and other revenue | $ | 114,169 | $ | 92,416 | ||||
| Interest income on funds held for clients | 4,134 | 316 | ||||||
| Total revenues | 118,303 | 92,732 | ||||||
| Cost of revenues | 43,185 | 45,611 | ||||||
| Gross profit | 75,118 | 47,121 | ||||||
| Operating expenses: | ||||||||
| Sales and marketing | 48,195 | 45,788 | ||||||
| General and administrative | 47,911 | 43,411 | ||||||
| Research and development | 12,402 | 10,191 | ||||||
| Total operating expenses | 108,508 | 99,390 | ||||||
| Loss from operations | (33,390 | ) | (52,269 | ) | ||||
| Other (expense) income: | ||||||||
| Interest expense | (1,087 | ) | (235 | ) | ||||
| Other | 445 | 1,224 | ||||||
| Loss before benefit for income taxes | (34,032 | ) | (51,280 | ) | ||||
| Income tax benefit | (4,980 | ) | (9,244 | ) | ||||
| Net loss | (29,052 | ) | (42,036 | ) | ||||
| Less: Accretion of redeemable noncontrolling interests | — | 11,621 | ||||||
| Net loss attributable to | $ | (29,052 | ) | $ | (53,657 | ) | ||
| Basic and diluted net loss attributable to | $ | (0.17 | ) | $ | (0.32 | ) | ||
| Weighted average common shares outstanding: | ||||||||
| Basic and diluted | 175,512,577 | 166,459,168 | ||||||
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
| Three Months Ended | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (29,052 | ) | $ | (42,036 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 1,200 | 1,718 | ||||||
| Amortization of intangible assets and software | 29,676 | 36,870 | ||||||
| Amortization of deferred contract costs | 10,028 | 6,634 | ||||||
| Stock-based compensation expense | 16,951 | 21,812 | ||||||
| Amortization of debt acquisition costs | 23 | 20 | ||||||
| Deferred tax benefit | (5,000 | ) | (9,253 | ) | ||||
| Bad debt expense | 562 | 794 | ||||||
| Loss (gain) on sale of investments | 47 | (6 | ) | |||||
| Gain on installment sale | — | (1,359 | ) | |||||
| Loss on foreign currency exchange | 424 | 222 | ||||||
| Loss on lease exit | 509 | — | ||||||
| Naming rights accretion expense | 893 | — | ||||||
| Changes in assets and liabilities, net of effects from acquisitions: | ||||||||
| Accounts receivable | (2,450 | ) | (316 | ) | ||||
| Prepaid expenses and other assets | (1,841 | ) | (4,338 | ) | ||||
| Accounts payable | 1,358 | 801 | ||||||
| Accrued liabilities and other | (25,220 | ) | (9,285 | ) | ||||
| Deferred revenue | (439 | ) | (1,185 | ) | ||||
| Deferred contract costs | (21,770 | ) | (18,338 | ) | ||||
| Net cash used in operating activities | (24,101 | ) | (17,245 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of client funds available-for-sale securities | (247,927 | ) | (39,708 | ) | ||||
| Proceeds from sale and maturities of client funds available-for-sale securities | 143,107 | 39,932 | ||||||
| Purchase of property and equipment | (331 | ) | (803 | ) | ||||
| Proceeds from note receivable on installment sale | — | 3,040 | ||||||
| Acquisition of intangible assets | (4,713 | ) | (195 | ) | ||||
| Internally developed software costs | (9,096 | ) | (7,524 | ) | ||||
| Net cash used in investing activities | (118,960 | ) | (5,258 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net change in cash and cash equivalents held to satisfy client funds obligations | (775,923 | ) | 906,626 | |||||
| Proceeds from line-of-credit | — | 3,500 | ||||||
| Repayments of line-of-credit | — | (52,600 | ) | |||||
| Repayments of debt and capital lease obligations | (70 | ) | — | |||||
| Proceeds from the issuance of common stock sold in the IPO, net of offering costs and underwriting discount | — | 455,040 | ||||||
| Redemption of Redeemable Series A Preferred Stock (acquisition of non-controlling interest) | — | (260,044 | ) | |||||
| Withholding taxes paid related to net share settlements | (1,293 | ) | — | |||||
| Proceeds from exercise of stock options | 345 | — | ||||||
| Proceeds from employee stock purchase plan | 4,300 | — | ||||||
| Other financing activities | — | (395 | ) | |||||
| Net cash (used in) provided by financing activities | (772,641 | ) | 1,052,127 | |||||
| Impact of foreign exchange on cash and cash equivalents | (14 | ) | (3 | ) | ||||
| Net change in cash, cash equivalents, restricted cash and short-term investments, and funds held for clients | (915,716 | ) | 1,029,621 | |||||
| Cash, cash equivalents, restricted cash and short-term investments, and funds held for clients, beginning of period | 1,682,923 | 560,000 | ||||||
| Cash, cash equivalents, restricted cash and short-term investments, and funds held for clients, end of period | $ | 767,207 | $ | 1,589,621 | ||||
| Supplemental disclosure of non-cash investing, financing and other cash flow information: | ||||||||
| Capital expenditures in accounts payable | $ | 9 | $ | 48 | ||||
| Cash paid during the year for interest | — | 150 | ||||||
| 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 | $ | 98,161 | $ | 125,787 | ||||
| Funds held for clients | 669,046 | 1,463,834 | ||||||
| Total cash, cash equivalents, restricted cash and short-term investments, and funds held for clients | $ | 767,207 | $ | 1,589,621 | ||||
Reconciliations of Non-GAAP Measures to GAAP Measures
Adjusted Gross Profit and Adjusted Gross Profit Margin (Unaudited)
| Three Months Ended | ||||||||
| (in thousands) | 2022 | 2021 | ||||||
| Gross Profit* | $ | 75,118 | $ | 47,121 | ||||
| Gross Profit Margin | 63.5 | % | 50.8 | % | ||||
| Amortization of intangible assets | 1,128 | 11,722 | ||||||
| Stock-based compensation expense | 2,210 | 1,657 | ||||||
| Adjusted Gross Profit* | $ | 78,456 | $ | 60,500 | ||||
| Adjusted Gross Profit Margin | 66.3 | % | 65.2 | % | ||||
* Gross Profit and Adjusted Gross Profit are burdened by depreciation expense of
Adjusted Operating Income (Unaudited)
| Three Months Ended | ||||||||
| (in thousands) | 2022 | 2021 | ||||||
| Loss from Operations | $ | (33,390 | ) | $ | (52,269 | ) | ||
| Operating Margin | (28.2 | )% | (56.4 | )% | ||||
| Amortization of intangible assets | 23,270 | 32,050 | ||||||
| Stock-based compensation expense | 16,951 | 21,812 | ||||||
| Loss on lease exit* | 509 | — | ||||||
| Corporate adjustments** | 3,073 | 1,799 | ||||||
| Adjusted Operating Income | $ | 10,413 | $ | 3,392 | ||||
| Adjusted Operating Income Margin | 8.8 | % | 3.7 | % | ||||
* Represents exit cost due to exiting leases of certain facilities.
** Corporate adjustments for the three months ended
Adjusted Operating Expenses (Unaudited)
| Three Months Ended | ||||||||
| (in thousands) | 2022 | 2021 | ||||||
| Sales and Marketing expense | $ | 48,195 | $ | 45,788 | ||||
| Amortization of intangible assets | (827 | ) | — | |||||
| Stock-based compensation expense | (7,434 | ) | (13,646 | ) | ||||
| Corporate adjustments* | — | (53 | ) | |||||
| Adjusted Sales and Marketing expense | $ | 39,934 | $ | 32,089 | ||||
| General and Administrative expense | $ | 47,911 | $ | 43,411 | ||||
| Amortization of intangible assets | (21,315 | ) | (20,328 | ) | ||||
| Stock-based compensation expense | (5,336 | ) | (4,988 | ) | ||||
| Loss on lease exit** | (509 | ) | — | |||||
| Corporate adjustments*** | (3,073 | ) | (1,746 | ) | ||||
| Adjusted General and Administrative expense | $ | 17,678 | $ | 16,349 | ||||
| Research and Development expense | $ | 12,402 | $ | 10,191 | ||||
| Stock-based compensation expense | (1,971 | ) | (1,521 | ) | ||||
| $ | 10,431 | $ | 8,670 | |||||
* Corporate adjustments for the three months ended
** Represents exit cost due to exiting leases of certain facilities.
*** Corporate adjustments for the three months ended
Adjusted Net Income Attributable to
| Three Months Ended | ||||||||
| (in thousands) | 2022 | 2021 | ||||||
| Net loss before benefit for income taxes | $ | (34,032 | ) | $ | (51,280 | ) | ||
| Loss on debt amendment | — | 35 | ||||||
| Amortization of intangible assets | 23,270 | 32,050 | ||||||
| Naming rights accretion expense | 893 | — | ||||||
| Gain on installment sale | — | (1,359 | ) | |||||
| Stock-based compensation expense | 16,951 | 21,812 | ||||||
| Loss on lease exit* | 509 | — | ||||||
| Corporate adjustments** | 3,073 | 1,799 | ||||||
| Non-GAAP adjusted income before applicable income taxes | 10,664 | 3,057 | ||||||
| Income tax effect on adjustments*** | (2,453 | ) | (734 | ) | ||||
| Adjusted Net Income Attributable to | $ | 8,211 | $ | 2,323 | ||||
| Adjusted Net Income Attributable to | $ | 0.05 | $ | 0.01 | ||||
| Adjusted shares outstanding**** | 175,933,418 | 169,660,544 | ||||||
* Represents exit cost due to exiting leases of certain facilities.
** Corporate adjustments for the three months ended
*** Non-GAAP adjusted income before applicable income taxes is tax effected using an adjusted effective tax rate of 23.0% for the three months ended
**** The adjusted shares outstanding for three months ended
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