Paycor HCM(US:PYCR)2022-11-05 19:24Financial Data and Key Metrics Changes - Revenue growth reached 28%, the highest level in over 5 years, with total revenue for the quarter at $118 million, increasing 28% year-over-year [8][23] - Adjusted gross profit margin improved to 66.3% compared to 65.2% a year ago, with adjusted gross margin excluding depreciation and amortization at 76.8%, an increase of nearly 2 points year-over-year [26] - Operating income increased to $10.4 million, representing an 8.8% profit margin, more than double the 3.7% from the previous year [30] - Free cash flow was a negative $30 million, compared to a negative $24 million last year, with expectations to be free cash flow positive for the full fiscal year [31] Business Line Data and Key Metrics Changes - The number of employees on the platform increased to over 2.3 million, up 10% year-over-year, with the average customer size increasing to 78 employees from 73 a year ago [25] - Sales and marketing expense was $40 million, or 34% of revenue, slightly below 35% a year ago, indicating continued investment in sales expansion [27] Market Data and Key Metrics Changes - Competitive dynamics remain consistent with strong demand, and the company had its best Q1 on record [10] - The labor market remains tight, with nonfarm payrolls slowly rising to pre-COVID levels and job openings at elevated levels [19] Company Strategy and Development Direction - The company is focused on expanding its sales coverage and growing its platform, targeting a 20% increase in sales headcount for the fiscal year [10] - Recent acquisitions, such as Talenya's candidate sourcing technology, are aimed at enhancing the talent solution and expanding the company's PEPM opportunity [13][14] - The company is committed to sustainable business practices, as evidenced by its first ESG report and improvements in diversity metrics [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business momentum and strong demand environment, with no material impact from macroeconomic changes observed [33] - The company expects interest income to increase further in the second quarter, anticipating $20 million to $24 million for the full year [34][35] Other Important Information - The company plans to reinvest about half of its interest income to accelerate its product roadmap or expand marketing programs [35] - The company has a significant runway for growth, with less than 2% share of its $29 billion total addressable market [37] Q&A Session Summary Question: What are the early trends in ramping up sellers hired last fiscal year? - Management noted that they are tracking sellers on a cohort basis and have seen good performance from the larger cohorts being hired recently [39] Question: What are the levers for gross margin expansion going forward? - Management indicated that adding additional products helps drive gross margin increases, as clients using more products require less service [40][41] Question: Can you provide an update on the micro segment? - The micro segment represents about 5% of total revenue and has seen slowed growth, but revenue growth continues in that segment [45] Question: Is the momentum in the restaurant and food services segments continuing? - Management confirmed that the trend has continued, with hiring remaining tight in the broader labor market [47] Question: What is the focus of the Talenya acquisition? - The acquisition is primarily focused on professional services, with plans to identify more use cases for hourly employees over time [53] Question: How is the hiring environment for sales associates? - Management reported no issues in identifying, recruiting, and hiring sales associates, with most hiring planned for the first half of the fiscal year [56] Question: How are recent sponsorships impacting customer acquisition? - Sponsorships have significantly increased brand awareness, with over 1 trillion digital impressions, and are expected to drive bookings growth [57][59]