Paycor HCM (PYCR) investor relations material

Executive summary

• Entered into a definitive agreement to be acquired by Paychex for $22.50 per share in cash, valuing the deal at $4.1 billion and representing a 19% premium over the 30-day VWAP as of January 3, 2025.

• Q2 FY2025 total revenues were $180.4M, up 13% year-over-year, driven by higher effective PEPM and customer employee growth.

• Net loss for the quarter was $2.0M, a significant improvement from a $26.2M net loss in the prior year period.

• Adjusted operating income rose to $31.8M (17.6%-18% margin), up from $23.3M (14.6%-15% margin) year-over-year.

• Net cash from operating activities improved to $37.1M, and adjusted free cash flow more than doubled to $28.5M.

Financial highlights

• Recurring and other revenue was $167.4M, up 14% year-over-year; interest income on client funds was $13.1M, up 6%.

• Gross profit increased 13% to $118.3M, with gross margin stable at 65.5%.

• Operating profit was $1.2M, reversing a $26.2M loss in Q2 FY24.

• Adjusted net income for the quarter was $25.0M, up from $18.7M year-over-year.

• Adjusted free cash flow: $28.5M vs. $14.8M year-over-year.

Outlook and guidance

• Merger with Paychex expected to close in the first half of 2025, after which Paycor will become a privately held subsidiary and delist from Nasdaq.

• Management expects continued revenue growth from customer and product expansion, with recurring revenue as the primary driver.

• Financial guidance for FY25 and Q3 FY25 suspended due to pending acquisition.