Online payroll and human resource software provider Paycor (NASDAQ:PYCR) reported Q1 FY2024 results beating Wall Street analysts' expectations, with revenue up 21.4% year on year to $143.6 million. Revenue guidance for the full year also exceeded analysts' estimates but next quarter's guidance of $155.5 million came in slightly below expectations. Turning to EPS, Paycor made a GAAP loss of $0.12 per share, improving from its loss of $0.17 per share in the same quarter last year.
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Paycor (PYCR) Q1 FY2024 Highlights:
- Revenue: $143.6 million vs analyst estimates of $139.6 million (2.9% beat)
- EPS (non-GAAP): $0.07 vs analyst estimates of $0.04 ($0.03 beat)
- Revenue Guidance for Q2 2024 is $155.5 million at the midpoint, below analyst estimates of $156.1 million
- The company reconfirmed its revenue guidance for the full year of $651 million at the midpoint
- Free Cash Flow was -$40.82 million, down from $29.97 million in the previous quarter
- Gross Margin (GAAP): 64.2%, up from 63.5% in the same quarter last year
Found in 1990 in Cincinnati, Ohio, Paycor (NASDAQ: PYCR) provides software for small businesses to manage their payroll and HR needs in one place.
HR SoftwareModern HR software has two powerful benefits: cost savings and ease of use. For cost savings, businesses large and small much prefer the flexibility of cloud-based, web-browser-delivered software paid for on a subscription basis rather than the hassle and complexity of purchasing and managing on-premise enterprise software. On the usability side, the consumerization of business software creates seamless experiences whereby multiple standalone processes like payroll processing and compliance are aggregated into a single, easy-to-use platform.
Sales GrowthAs you can see below, Paycor's revenue growth has been strong over the last two years, growing from $92.73 million in Q1 FY2022 to $143.6 million this quarter.
This quarter, Paycor's quarterly revenue was once again up a very solid 21.4% year on year. On top of that, its revenue increased $3.55 million quarter on quarter, a strong improvement from the $21.44 million decrease in Q4 2023. This is a sign of acceleration of growth and very nice to see indeed.
Next quarter's guidance suggests that Paycor is expecting revenue to grow 17% year on year to $155.5 million, slowing down from the 28.9% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 16.5% over the next 12 months before the earnings results announcement.
ProfitabilityWhat makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Paycor's gross profit margin, an important metric measuring how much money there's left after paying for servers, licenses, technical support, and other necessary running expenses, was 64.2% in Q1.
That means that for every $1 in revenue the company had $0.64 left to spend on developing new products, sales and marketing, and general administrative overhead. Paycor's gross margin is poor for a SaaS business and it's dropped significantly since the previous quarter. This is probably the exact opposite of what shareholders would like to see.
Key Takeaways from Paycor's Q1 Results Sporting a market capitalization of $3.18 billion, Paycor is among smaller companies, but its more than $54.28 million in cash on hand and positive free cash flow over the last 12 months puts it in an attractive position to invest in growth.
It was good to see Paycor beat analysts' revenue expectations this quarter. That really stood out as a positive in these results. On the other hand, its revenue guidance for next quarter missed analysts' expectations, its gross margin decreased and cash burn increased year on year. Overall, this was a mixed quarter for Paycor. The stock is up 2% after reporting and currently trades at $18.21 per share.
The author has no position in any of the stocks mentioned in this report.
