Paycor HCM, Inc.

Paycor reported first-quarter fiscal 2025 total revenue of $167 million, up 17% year over year. Recurring revenue grew 16%, average employees on the platform rose 5%, and effective PEPM increased 11% year over year to $19; excluding embedded HCM deals, effective PEPM rose 12%. Adjusted gross profit margin excluding depreciation and amortization was 79.2%, up about 90 basis points, and adjusted operating income increased more than 40% to $23 million with a 13.6% margin, versus 11.1% a year ago. Adjusted free cash flow was a use of $22 million, and the company ended the quarter with $98 million in cash and no debt. For Q2, Paycor expects revenue of $176 million to $178 million and adjusted operating income of $26 million to $27 million. For fiscal 2025, it now expects revenue of $726 million to $733 million, including $48 million to $50 million of interest income, and adjusted operating income of $127 million to $130 million.

Raul Villar said Paycor’s connected HCM platform continues to win in the market by linking people, data, and expertise, and he tied the quarter’s 17% growth to that positioning. He emphasized that the company is investing pragmatically in sales and product while still scaling margins and free cash flow. His tone was constructive and confident, especially around demand, upmarket traction, broker influence, embedded partnerships, and AI-driven usability.

Adam Ante framed the quarter as one of both growth and operating leverage: revenue was $167 million, adjusted gross margin was 79.2%, adjusted operating income was $23 million, and free cash flow was a seasonal low at a $22 million use. He highlighted that sales and marketing was $52 million, or 31% of revenue, R&D was $28 million, or 17% of revenue, and G&A was $21 million, or 13% of revenue, all reflecting improving efficiency. He also noted $13 million of interest income on average client funds of about $1.1 billion, plus a strong cash position of $98 million and no debt. On capital allocation and outlook, he said the company remains growth-focused but disciplined, while raising full-year guidance on stable demand and potential further PEPM expansion.

Analysts focused on AI monetization, embedded HCM, pricing, rep productivity, and whether the company’s go-to-market issues from earlier in the year were behind it. Management said AI investments are mostly about product usability and mobile workflows, with pilot feedback on Paycor Assistant described as strong, but monetization is still early and not yet priced. On embedded, management said it now has more than 10 partners, is seeing opportunities across technology and centers of influence, and expects embedded revenue to double in fiscal 2025, though it still represents only a low-single-digit share of total revenue. Management also said seller tenure has improved for two straight quarters, broker-led bookings are over 60% of field bookings, and deal cycles are largely unchanged except for about a one-week increase at the top end of the book.