Market Minute: Weekend Spotlight: Paycor (PYCR) CFO on Employment Trends & Company Overview

Paycor’s (PYCR) CFO Adam Ante joined The Watch List to discuss what trends Paycor is seeing in employment. Paycor needs the labor market to stay hot for their bread and butter – and Ante notes that the company also benefits from high interest rates, since it holds payroll for other companies. He notes that there are less jobs requiring A.I. skills than one might expect, given the hype on Wall Street: only about two in a thousand. If that area continues to develop more rapidly, he touts “micro-education” and training for employees to keep up.

However, his bigger message was, “the social contract has changed over the last four years.” Employees and job seekers are both looking for more emphasis on flexibility, with many looking for remote or hybrid work. That means reimagining how to work together, Ante said, whether in meetings or in general. Despite the much-trumpeted “death of D.E.I.” this year, he also said that more employees are considering a company’s “social impact” when they apply. Not only that, but the companies that are doing better are the ones more tuned into their workforce’s needs, whether through internal surveys or other measures.

The insights are valuable, but let’s take a look at Paycor itself.

Paycor, founded in 1990 by Robert Coughlin, is a payroll processing and HR software company aimed at small- and medium-sized businesses. Perhaps overshadowed by splashier market entries like Workday (WDAY), which trades at a much higher stock price, or the giants ADP (ADP) and Paychex (PAYX), Paycor is a first mover of sorts – the PC revolution began around its inception. Of course, being a first mover in tech at a time that technology accelerated at rapid speeds (goodbye, VHS, CDs, and at this point, physical media itself…) doesn’t necessarily make one a winner.

The stock has never climbed past the all-time high of $39.71 made shortly after its 2021 IPO, and in fact hit an all-time low of $10.92 this June. It is down over 9% year-to-date, though it has bounced off the low and is climbing higher. So, with many competitors in the market and less name recognition, what does Paycor have to uniquely offer?

Coughlin said in an interview with Forbes that he doubled down on “a higher level of personal service to clients.” Forbes quotes an email to his staff where he said, “Part of what I want to do in my life is achieve things that drive that passion to make a difference and do good things.” However, Coughlin stepped down as CEO in 2019 and fully retired in 2020, before the company’s IPO. Raul Villar, Jr., Paycor’s CEO, has led the company since.

The Software Report’s list of top 25 HR software providers for 2019 notes that the company served over 30,000 businesses around the time of Coughlin’s retirement. In their 2024 Investment Day Presentation, Paycor listed over 30,000 customers, representing over 2.7 million employees. Their internal metrics list ‘customers’ as corporate entities that can each have multiple accounts listed – the About section of their website currently states they serve over 50,000 businesses.

In their last quarterly report, 1Q25, Paycor reported revenue growth of 17% with gross profit margin of 64.6% and operating margin of -8.5%. The operating loss could be an issue for the company, although it improved year-over-year from -16.3%. Paycor also reiterated its revenue guidance for FY25.

In its Investor Day presentation, the company claims to be successfully executing its IPO Strategic Initiatives, including a +50% growth in sales coverage, an expanded product portfolio, and +23% compound annual growth rate for revenue. It also highlights a $1.1+ billion opportunity to cross-sell within its client base.

Paycor has interesting insights into the employment market, but is it worth more consideration from investors? Despite its age, it looks like it could be a growth story under the right management. However, investors should keep an eye on those reported losses, and its ability to grow customer count. Tune into the Schwab Network for more executive interviews and company breakdowns!