Paycor Announces Second Quarter Fiscal Year 2025 Financial Results

• Entered into a definitive agreement to be acquired by Paychex, Inc.

• Q2 Total revenues of $180.4 million, an increase of 13% year-over-year, while expanding operating margins

• Q2 Recurring revenues of $167.4 million, an increase of 14% year-over-year
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Second Quarter Fiscal Year 2025 Financial Highlights

• Total revenues were $180.4 million, an increase of 13% from the second quarter of FY 2024.

• Operating profit was $1.2 million, compared to an operating loss of $26.2 million from the second quarter of FY 2024 or 1% of Total revenues compared to (16%) in the second quarter of FY 2024.
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• Adjusted operating income* was $31.8 million, compared to $23.3 million or an increase of 36% from the second quarter of FY 2024, or 18% of Total revenues compared to 15% in the second quarter of FY 2024.

• Net loss was $2.0 million, compared to $26.2 million for the second quarter of FY 2024.
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• Adjusted net income* was $25.0 million, compared to $18.7 million for the second quarter of FY 2024.

• Net cash provided by operating activities improved to $37.1 million from $26.2 million for the second quarter of FY 2024.
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• Adjusted free cash flow* improved to $28.5 million from $14.8 million for the second quarter of FY 2024.

Pending Merger with Paychex, Inc.

On January 7, 2025, we announced that we had entered into a definitive agreement ("Merger Agreement”) to be acquired by Paychex, Inc. ("Paychex”) in an all-cash transaction structured as a merger and valued at approximately $4.1 billion, or $22.50 per share. The per-share merger consideration represents a premium of approximately 19% over Paycor's 30-day volume weighted average trading price as of the unaffected trading date of January 3, 2025. The Merger Agreement has been unanimously approved by Company's Board of Directors, as well as the holders of a majority of the Company's outstanding common stock. The merger is expected to close in the first half of calendar 2025, subject to satisfaction of regulatory approvals and other customary closing conditions. Upon completion of the merger, we will become a wholly-owned subsidiary of Paychex, and our common stock will be delisted from Nasdaq.

Given the pending transaction, we will not be hosting an earnings conference call, are suspending financial guidance for fiscal year 2025, and will not provide financial guidance for the third quarter ending March 31, 2025. For further detail and discussion of our financial performance, please refer to our Form 10-Q for the fiscal quarter ended December 31, 2024.

Additional Information and Where to Find It

We intend to file relevant materials with the SEC, including a preliminary and definitive information statement relating to the proposed transaction. The definitive information statement will be mailed to Paycor's stockholders. STOCKHOLDERS ARE URGED TO CAREFULLY READ THE INFORMATION STATEMENT REGARDING THE PROPOSED TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

A free copy of the information statement and other related documents (when available) filed by the Company with the SEC may be found on the "SEC Filings” section of Paycor's investor relations website at https://www.investors.paycor.com and on the SEC website at www.sec.gov.

No Offer

No person has commenced soliciting proxies in connection with the proposed transaction referenced in this release, and this release is neither an offer to purchase nor a solicitation of an offer to sell securities.

About Paycor

Paycor's HR, payroll, and talent platform connects leaders to people, data, and expertise. We help leaders drive engagement and retention by giving them tools to coach, develop, and grow employees. We give them unprecedented insights into their operational data with a unified HCM experience that can seamlessly connect to other mission-critical technology. By providing expert guidance and consultation, we help them achieve business results and become an extension of their teams. Learn more at paycor.com.​

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact, including statements regarding our future results of operations and financial position, our business outlook, our business strategy and plans, our objectives for future operations, and any statements of a general economic or industry specific nature, are forward-looking statements. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Words such as "anticipate,” "estimate,” "expect,” "project,” "plan,” "intend,” "believe,” "may,” "will,” "should,” "can have,” "likely,” "outlook,” "potential,” "targets,” "contemplates,” or the negative or plural of these words and similar expressions are intended to identify forward-looking statements.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in our most recent Annual Report on Form 10-K, as well as in our other filings with the Securities and Exchange Commission. Additionally, these forward-looking statements are subject to a number of risks, uncertainties and assumptions related to the Merger Agreement. We believe that these risks include, but are not limited to: the risk that the merger may not be completed in a timely manner or at all, which may adversely affect our business and the price of our common stock; the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement; potential litigation relating to the merger that could be instituted against the parties to the Merger Agreement or their respective directors or officers, including the effects of any outcomes related thereto; certain restrictions during the pendency of the merger that may impact our ability to pursue certain business opportunities or strategic transactions; uncertainty as to timing of completion of the merger; risks that the benefits of the merger are not realized when and as expected; our ability to manage our growth effectively; the potential unauthorized access to our customers' or their employees' personal data as a result of a breach of our or our vendors' security measures; the expansion and retention of our direct sales force with qualified and productive persons and the related effects on the growth of our business; the impact on customer expansion and retention if implementation, user experience, customer service, or performance relating to our solutions is not satisfactory; the timing of payments made to employees and taxing authorities relative to the timing of when a customer's electronic funds transfers are settled to our account; future acquisitions of other companies' businesses, technologies, or customer portfolios; the continued service of our key executives; our ability to innovate and deliver high-quality, technologically advanced products and services; risks specifically associated with our development and use of artificial intelligence in our solutions; our ability to attract and retain qualified personnel; the proper operation of our software; our relationships with third parties that provide financial and other functionality integrated into our HCM platform; the extent to which negative macroeconomic conditions persist or worsen in the markets in which we or our customers operate; and the impact of an economic downturn or recession in the United States or global economy. You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations and assumptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We undertake no obligation to publicly update any forward-looking statement after the date of this report, whether as a result of new information, future developments or otherwise, or to conform these statements to actual results or revised expectations, except as may be required by law.

Non-GAAP Financial Measures

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States ("GAAP”), we present the following non-GAAP financial measures in this press release: adjusted gross profit, adjusted gross profit margin, adjusted operating income, adjusted operating income margin, adjusted sales and marketing expense, adjusted general and administrative expense, adjusted research and development expense, adjusted net income, adjusted net income per share, adjusted free cash flow and adjusted free cash flow margin. Management believes these non-GAAP measures are useful in evaluating our core operating performance and trends to prepare and approve our annual budget, and to develop short-term and long-term operating plans. Management believes that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. We define (i) adjusted gross profit as gross profit before amortization of intangible assets and stock-based compensation expense, in each case that are included in costs of revenues, (ii) adjusted gross profit margin as adjusted gross profit divided by total revenues, (iii) adjusted operating income as income (loss) from operations before amortization of acquired intangible assets and naming rights, stock-based compensation expense, exit costs due to exiting leases of certain facilities and other certain corporate expenses, such as costs related to secondary offerings, professional, consulting and other costs and acquisition costs, (iv) adjusted operating income margin as adjusted operating income divided by total revenues, (v) adjusted sales and marketing expense as sales and marketing expenses before amortization of naming rights and stock-based compensation expense, (vi) adjusted general and administrative expense as general and administrative expenses before amortization of acquired intangible assets, stock-based compensation expense, exit costs due to exiting leases of certain facilities and other certain corporate expenses, such as costs related to secondary offerings, professional, consulting and other costs and acquisition costs, (vii) adjusted research and development expense as research and development expenses before stock-based compensation expense, (viii) adjusted net income as income (loss) before expense (benefit) for income taxes after adjusting for amortization of acquired intangible assets and naming rights, accretion expense associated with the naming rights, change in fair value of contingent consideration, stock-based compensation expense, exit costs due to exiting leases of certain facilities and other certain corporate expenses, such as costs related to secondary offerings, professional, consulting and other costs and acquisition costs, all of which are tax effected by applying an adjusted effective income tax rate, (ix) adjusted net income per share as adjusted net income divided by adjusted shares outstanding, which includes potentially dilutive securities excluded from the GAAP dilutive net income (loss) per share calculation, (x) adjusted free cash flow as cash provided (used) by operating activities less the purchase of property and equipment and internally developed software costs, excluding other certain corporate expenses, which are included in cash provided (used) by operating activities and (xi) adjusted free cash flow margin as adjusted free cash flow divided by total revenues.

The non-GAAP financial measures presented in this press release are not measures of financial performance under GAAP and should not be considered a substitute for gross profit, gross margin, income (loss) from operations, operating income margin, sales and marketing expense, general and administrative expense, research and development expense, net income (loss), diluted net income (loss) per share and cash provided (used) by operating activities. Non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. The non-GAAP financial measures that we present may not be comparable to similarly titled measures used by other companies. A reconciliation is provided below under "Reconciliations of Non-GAAP Measures to GAAP Measures,” for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP.

Investor Relations:

Rachel White

513-954-7388

[email protected]

Media Relations:

Carly Pennekamp

513-954-7282

[email protected]