Paycor HCM (PYCR) Goldman Sachs Technology Communacopia and Technology Conference summary

Fiscal year planning and market environment

• Leadership reflected on three years as a public company, noting a tougher macro environment in FY 2024 compared to post-IPO years.

• Focus areas for FY 2025 include continued investment in successful channels, especially indirect and embedded, and product innovation.

• Team stability over the past 3-4 years supports long-term planning in HCM and payroll, looking beyond current macro trends.

• HCM demand cycle has remained steady, while labor market growth has slowed post-COVID; demand for software solutions is a key driver.

• Industry trends show pressure in retail, restaurant, and manufacturing, but growth in healthcare and government sectors.

Market share, competition, and go-to-market strategy

• Market is not saturated; significant share still comes from regional and in-house service bureaus, which represent 45-50% of the market.

• Main competitors in mid-market are ADP and Paylocity, with Gusto as a notable scaled competitor.

• Product investments have enabled expansion up to 5,000 employees, but complexity and global needs cap further upmarket movement.

• Sales segmentation was adjusted to better match seller experience with deal size, improving quota attainment and reducing churn.

• Slowed sales hiring to focus on leadership quality and effective segmentation, with plans to ramp up hiring if productivity and tenure improve post-year-end.

Sales force performance and productivity

• Top 30% of sellers drive most sales; improving tenure and success in the next third is key to future hiring acceleration.

• Win rates have increased from 20% to over 50% due to investments in sales capacity and product development.