Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ———————— Form 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2023 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 001-40640 PAYCOR HCM, INC. (Exact name of registrant as specified in its charter) (State ...

Paycor HCM, Inc. (NASDAQ:PYCR) Q2 2024 Results Conference Call February 7, 2024 5:00 PM ET Company Participants Rachel White - Vice President, Investor Relations Raul Villar - Chief Executive Officer Adam Ante - Chief Financial Officer Conference Call Participants Mark Murphy - JPMorgan Gabriela Borges - Goldman Sachs Bhavin Shah - Deutsche Bank Terrell Tillman - Truist Securities Scott Berg - Needham & Company Brad Reback - Stifel Brian Peterson - Raymond James Zack Ajzenman - TD Cowen Matt Pfau - William ...

Financial Data and Key Metrics Changes - The company reported total revenues of $144 million, representing a 21% year-over-year increase [113] - Recurring revenue grew 16% year-over-year, slightly above guidance, driven by an increase in the number of employees on the platform and the amount charged per employee per month [113] - Adjusted operating income increased more than 50% to $16 million, with margins of 11.1%, up over 200 basis points from 8.8% last year [115] - Adjusted gross profit margin improved to 78.3%, more than 140 basis points higher than the prior year [18] Business Line Data and Key Metrics Changes - The average customer size increased to 83 employees per customer, up from 78 a year ago, with stronger growth in enterprise customers [113] - The number of employees in the mid-market and enterprise segments grew 11% year-over-year, while growth in the micro segment remained flat [114] - The effective PEPM increased by 6% year-over-year to more than $17 for the quarter [17] Market Data and Key Metrics Changes - The company has more than 2.5 million employees on its platform, up 9% over the prior year across more than 30,800 customers [113] - The labor market growth was 2%, marginally outperforming the company's assumption of 0 to 1% [113] Company Strategy and Development Direction - The company is focused on execution, scaling the business, and driving margin expansion, with a strong demand environment and higher top-of-funnel demand than a year ago [20] - The company is shifting upmarket, with clients purchasing more complete solutions, leading to an increase in average deal size and attach rates [16] - The company announced a new go-to-market channel leveraging interoperability with technology firms, aiming to disrupt legacy in-house solutions [110] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand environment, stating it remains solid and consistent with previous quarters [43] - The company anticipates total revenues for the second quarter to be between $154.5 million and $156.5 million, representing 18% growth at the high end of the range [21] - Management noted that the embedded HCM partnerships will increasingly contribute to revenue growth in the second half of fiscal 2024 [5] Other Important Information - The company generated $11 million of interest income on average client funds of just over $1 billion at an effective rate of about 425 basis points [21] - The company received several culture excellence awards for promoting DE&I practices and employee well-being [112] Q&A Session Summary Question: Changes in recurring revenue linearity and enterprise pipeline - Management indicated no real change in expectations regarding the enterprise pipeline and timing of go-lives [25] Question: Cross-selling cadence and market segments - Management reported strong cross-selling across all enterprise sizes, with talent management outperforming the rest of the portfolio [26] Question: Broker channel performance - Management expressed optimism about the broker channel, noting it contributes around 50% to overall bookings [28] Question: Embedded HCM solution opportunity - Management confirmed that the embedded HCM solution contributed about 1 point of employee growth this quarter and has potential for higher growth in the future [33] Question: Sales and marketing expense trends - Management stated that sales team productivity is consistent with expectations, and retention has remained stable year-over-year [35] Question: Demand environment relative to pre-pandemic - Management confirmed that the demand environment remains strong and consistent with previous quarters [43] Question: Generative AI client interest - Management noted early interest in generative AI functionalities, with potential revenue opportunities still being assessed [44] Question: Recurring revenue growth rate fluctuations - Management explained that the recurring revenue growth rate has been consistent, with some lumpiness due to new service rollouts [48] Question: Pricing contribution to revenue - Management indicated that pricing actions typically contribute about one-third of PEPM growth [100] Question: Guidance for recurring revenue acceleration - Management noted that the guidance implies a 2-point acceleration in recurring revenue in the second half of the year, driven by partnerships and same-store sales [104]

Financial Performance & Growth - Paycor's FY'23 revenue reached $553 million[29] - The company experienced 29% revenue growth[29] - Adjusted Gross Profit Excluding Depreciation & Amortization increased from $248 million in FY'20 to $436 million in FY'23[9] - Q1 FY'24 Adjusted Operating Income was $16 million[78] Market & Opportunity - The SMB (Small and Medium-sized Business) market represents a $38 billion opportunity[17, 29] - The SMB market is still underserved, presenting strong growth potential[6, 29] - Paycor has less than 2% market share in the SMB segment[31] Sales & Marketing - The company's sales force grew by 22% in FY'23, exceeding 550 sales associates[29, 52] - 75% of sales come from legacy incumbents[62] Guidance - Q2 FY'24 total revenue is projected to be between $1545 million and $1565 million[73] - FY'24 total revenue is projected to be between $648 million and $654 million[73]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ———————— Form 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 001-40640 PAYCOR HCM, INC. (Exact name of registrant as specified in its charter) (State ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ———————— Form 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2023 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 001-40640 PAYCOR HCM, INC. (Exact name of registrant as specified in its charter) (State or other jur ...

Financial Data and Key Metrics Changes - For fiscal year 2023, total revenues reached $553 million, marking a 29% year-over-year increase, driven by new business wins and PEPM expansion [48] - In Q4 2023, total revenues were $140 million, a 26% increase year-over-year, with recurring revenue growing 18% year-over-year [25][44] - Adjusted operating income for the full year increased nearly 75% to $83 million, with margins improving by almost 400 basis points [50] Business Line Data and Key Metrics Changes - The average customer size increased to 82 employees per customer, up from 77 the previous year, indicating a shift towards larger clients [2][11] - Effective PEPM rose 11% year-over-year to just over $18 for the quarter, driven by cross-sales and higher bundle adoption [26] - The company expanded its sales force by 22% to approximately 560 sales associates, enhancing coverage in Tier 1 cities from 28% to 36% [17] Market Data and Key Metrics Changes - Employee growth in the micro segment moderated, while the mid-market and enterprise segments saw a 9% increase year-over-year [26] - The company surpassed 2.5 million employees on its platform, up 8% over the prior year, with more than 30,000 customers [48] Company Strategy and Development Direction - The company aims for sustainable revenue growth of over 20% while expanding margins and generating greater free cash flow [8] - Continued focus on execution in the SMB space and expanding PEPM with innovative solutions is a key part of the strategy [8] - The company is strategically shifting upmarket, targeting clients with more than 100 employees, which is expected to drive larger deal sizes [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the HCM demand environment, noting that it remains resilient despite a moderating labor market [51] - The outlook for fiscal 2024 anticipates moderate Fed funds decreases in the second half of the year, with expectations for marginal interest income growth [51] - Management acknowledged headwinds from the labor market, projecting low single-digit to no growth contribution from this sector [32] Other Important Information - The company plans to discontinue providing bookings data moving forward, focusing instead on revenue growth as the primary metric of success [29] - The average deal size and PEPM continue to expand, with a strong emphasis on talent management solutions [106] Q&A Session All Questions and Answers Question: What headwinds are expected from the moderating growth in the labor market? - Management indicated a low single-digit to no growth contribution from the labor market, estimating a 3 to 4 point headwind for the quarter and similar for the full year [32] Question: What are the seller hiring expectations for 2024? - Management believes there is a significant market opportunity and strong win rates, indicating continued hiring in the sales organization [35] Question: Can you clarify the operating margin guide for Q1? - Management noted that the operating margin guide implies a slight decline year-over-year, with seasonality in operating expenses to consider [36] Question: How is the average number of employees per customer affecting the customer mix? - Management confirmed that the average employee size is increasing, which is positively impacting the mix of bookings and sales organization hiring [37] Question: What is the outlook for net revenue retention (NRR) for FY 2024? - Management aims for NRR to reach 100% to 105%, but anticipates headwinds from labor market growth affecting this target [75] Question: What is driving the change in win rates against legacy providers? - Management reported an increase in win rates against legacy providers, with regional service bureaus and in-house solutions being the primary sources of wins [91]

Paycor HCM, Inc. (NASDAQ:PYCR) Q3 2023 Earnings Conference Call May 10, 2023 5:00 PM ET Company Participants Rachel White - Vice President of Investor Relations Raul Villar - Chief Executive Officer Adam Ante - Chief Financial Officer Conference Call Participants Mark Murphy - JPMorgan Samad Samana - Jefferies Bhavin Shah - Deutsche Bank Terry Tillman - Truist Securities Bryan Bergin - TD Cowen Scott Berg - Needham Brad Reback - Stifel Brian Peterson - Raymond James Mark Marcon - Baird Kevin McVeigh - Credi ...

[Part I - FINANCIAL INFORMATION](index=5&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three and nine months ended March 31, 2023 [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $2.74 billion due to a reduction in funds held for clients, while stockholders' equity remained stable Condensed Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2023 | June 30, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $82,858 | $133,041 | | Funds held for clients | $1,258,249 | $1,715,916 | | Goodwill | $761,425 | $750,155 | | **Total assets** | **$2,742,998** | **$3,131,317** | | **Liabilities & Equity** | | | | Client fund obligations | $1,260,057 | $1,719,047 | | **Total liabilities** | **$1,457,734** | **$1,846,586** | | **Total stockholders' equity** | **$1,285,264** | **$1,284,731** | [Unaudited Condensed Consolidated Statements of Operations](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Q3 revenue grew 31.7% to $161.5 million, driven by recurring revenue and interest income, narrowing the net loss to $7.3 million Statement of Operations Highlights (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $161,482 | $122,597 | $412,649 | $318,396 | | Gross profit | $112,159 | $81,440 | $273,957 | $190,546 | | Loss from operations | $(8,031) | $(23,461) | $(72,990) | $(109,494) | | Net loss | $(7,340) | $(16,698) | $(63,855) | $(84,198) | | Net loss per share (basic & diluted) | $(0.04) | $(0.10) | $(0.36) | $(0.56) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations was $16.4 million, while investing and financing activities resulted in significant cash outflows Cash Flow Summary (in thousands) | Activity | Nine Months Ended Mar 31, 2023 | Nine Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $16,385 | $11,631 | | Net cash used in investing activities | $(177,619) | $(76,887) | | Net cash (used in) provided by financing activities | $(447,416) | $1,349,901 | [Notes to the Unaudited Condensed Consolidated Statements](index=11&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Statements) Key disclosures cover accounting policies, the Talenya acquisition, a new naming rights deal, and the adoption of lease standard ASC 842 - The company is a leading provider of HCM software for small and medium-sized businesses (10-1,000 employees) via a SaaS delivery model[32](index=32&type=chunk) - On October 27, 2022, the Company acquired Talenya Ltd, an AI-driven talent sourcing provider, for an initial cash price of **$20 million**, plus up to $10 million in earnouts, adding **$12.1 million to goodwill**[53](index=53&type=chunk)[55](index=55&type=chunk) - On August 7, 2022, the Company entered into a **16-year naming rights partnership** for Paycor Stadium, home of the Cincinnati Bengals, which was recorded as an intangible asset[68](index=68&type=chunk)[69](index=69&type=chunk) - The company adopted the new lease standard ASC 842 on July 1, 2022, resulting in the recognition of **$17.5 million in lease assets** and **$24.6 million in lease liabilities**[43](index=43&type=chunk)[45](index=45&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 32% Q3 revenue increase, improved non-GAAP profitability, and a stable liquidity position - The company's business model is based on a recurring per-employee-per-month (PEPM) SaaS subscription model, targeting SMBs with 10-1,000 employees, serving approximately **30,100 customers** as of March 31, 2023[98](index=98&type=chunk)[99](index=99&type=chunk) - Key growth strategies include expanding the sales footprint to add new customers, increasing product penetration with existing customers, and ongoing product innovation[105](index=105&type=chunk)[109](index=109&type=chunk)[112](index=112&type=chunk) Q3 FY2023 vs Q3 FY2022 Performance (in thousands) | Metric | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $161,482 | $122,597 | 32% | | Gross Profit | $112,159 | $81,440 | 38% | | Loss from Operations | $(8,031) | $(23,461) | (66%) | | Net Loss | $(7,340) | $(16,698) | (56%) | | Adjusted Operating Income* | $39,107 | $24,650 | 59% | [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Q3 revenue grew 32% to $161.5 million, driven by a 23% rise in recurring revenue and a surge in interest income - Q3 recurring and other revenue increased by **$28.6 million (23%) YoY**, driven by an increase in the average number of employees per customer and higher effective PEPM[142](index=142&type=chunk) - Q3 interest income on funds held for clients surged by **$10.3 million (2,529%) YoY**, due to higher average client fund balances and higher interest rates[142](index=142&type=chunk)[143](index=143&type=chunk) - Q3 General and Administrative expenses **decreased by $3.1 million (6%) YoY**, primarily due to an $8.1 million decrease in loss from exiting leases[146](index=146&type=chunk) [Non-GAAP Financial Measures](index=38&type=section&id=Non-GAAP%20Financial%20Measures) Q3 Adjusted Operating Income rose 59% to $39.1 million, and Adjusted Net Income grew 70% to $31.6 million Reconciliation of Loss from Operations to Adjusted Operating Income (in thousands) | | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Loss from Operations | $(8,031) | $(23,461) | $(72,990) | $(109,494) | | Amortization of intangible assets | 24,467 | 22,136 | 72,410 | 79,548 | | Stock-based compensation expense | 20,384 | 16,294 | 58,019 | 55,321 | | Loss on lease exit | 915 | 9,055 | 1,733 | 9,055 | | Corporate adjustments | 1,372 | 626 | 7,991 | 3,871 | | **Adjusted Operating Income** | **$39,107** | **$24,650** | **$67,163** | **$38,301** | Adjusted Net Income Attributable to Paycor HCM, Inc. (in thousands, except per share) | | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Adjusted Net Income** | **$31,589** | **$18,648** | **$53,449** | **$28,932** | | Adjusted Net Income Per Share | $0.18 | $0.11 | $0.30 | $0.17 | [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $82.9 million in cash and $200 million available under its credit facility - Principal sources of liquidity as of March 31, 2023, were cash and cash equivalents of **$82.9 million** and **$200.0 million** of available borrowing capacity under the revolving credit facility[190](index=190&type=chunk) - The company had **no outstanding borrowings** under its Revolving Credit Facility as of March 31, 2023, and was in compliance with all financial covenants[194](index=194&type=chunk)[196](index=196&type=chunk) - Net cash provided by operating activities for the nine months ended March 31, 2023, was **$16.4 million**, compared to $11.6 million for the same period in 2022[200](index=200&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks are interest rate fluctuations affecting client fund income and foreign currency exchange, which is currently minimal - The company is exposed to interest rate risk on its cash equivalents and funds held for clients, which totaled **$1,258.2 million** as of March 31, 2023[214](index=214&type=chunk)[215](index=215&type=chunk) - A hypothetical **100-basis point change** in interest rates would have an **immaterial effect** on the market value of the company's available-for-sale securities as of March 31, 2023[215](index=215&type=chunk) - As of March 31, 2023, there was **no outstanding debt** under the Revolving Credit Facility, so a 100-basis point change in market interest rates would result in no change to interest expense[217](index=217&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2023, with no material changes - Based on an evaluation as of March 31, 2023, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective**[223](index=223&type=chunk) - There were **no material changes** to the company's internal control over financial reporting during the third quarter of fiscal 2023 that have materially affected, or are reasonably likely to materially affect, internal controls[224](index=224&type=chunk) [Part II - OTHER INFORMATION](index=45&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings that are expected to have a material adverse effect on its business - The company is not presently a party to any legal proceedings that would be expected to have a **material adverse effect** on the business[227](index=227&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been **no material changes** from the risk factors set forth in the company's Annual Report on Form 10-K[227](index=227&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) None reported for the period - None[228](index=228&type=chunk) [Item 3. Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None reported for the period - None[229](index=229&type=chunk) [Item 4. Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - None[230](index=230&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) None reported for the period - None[231](index=231&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including officer certifications required by the Sarbanes-Oxley Act

Paycor. Paycor HCM, Inc.'s (together with its subsidiaries, "Paycor" or the "Company") fiscal year ends on June 30. References to "fiscal 2022" or "FY'22" refer to the fiscal year ended June 30, 2022. References to "fiscal 2021" or "FY'21" refer to the fiscal year ended June 30, 2021. References to "fiscal 2020" or "FY'20" refer to the fiscal year ended June 30, 2020. References to "fiscal 2019" or "FY'19" refer to the arithmetic sum of the results of (i) Paycor, Inc., the Company's accounting predecessor, ...