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PYCR Paycor HCM

Filed: 31 Aug 21, 4:07pm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 31, 2021
PAYCOR HCM, INC.
(Exact name of registrant as specified in its charter)
Delaware001-4064083-1813909
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
4811 Montgomery Road
Cincinnati, OH
45212
(Address of principal executive offices)(Zip Code)
(800) 381-0053
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)
Name of each exchange on which
registered
Common Stock, $0.001 par valuePYCR
The NASDAQ Stock Market LLC
(Nasdaq Global Select Market)
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐






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Item 2.02 Results of Operations and Financial Condition.

On August 31, 2021, Paycor HCM, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and year ended June 30, 2021. A copy of the press release is furnished as Exhibit 99.1 to this current report and is incorporated herein by reference.

The information furnished on this Form 8-K, including the exhibits attached, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

The Company makes references to non-GAAP financial measures in the attached press release. A description of the non-GAAP financial measures and a reconciliation of the non-GAAP financial measures to the most closely comparable GAAP financial measures are contained in the attached press release.

Item 9.01 Financial Statements and Exhibits.

(d)    Exhibits

Exhibit No.Description
104Cover Page Interactive Data File (formatted as Inline XBRL)








































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SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


PAYCOR HCM, INC.
August 31, 2021By:/s/ ALICE GEENE
Name: Alice Geene
Title: Chief Legal Officer and Secretary







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Exhibit 99.1

Paycor HCM, Inc. Announces Fourth Quarter and Fiscal Year 2021 Financial Results

Q4 Recurring and Other Revenue of $87.6 million, an increase of 21% year-over-year

Q4 Total Revenue of $88.0 million, an increase of 20% year-over-year

Q4 Total Bookings of $31.2 million, an increase of 79% year-over-year

FY21 Recurring and Other Revenue of $351.0 million, an increase of 10% year-over-year

FY21 Total Revenue of $352.8 million, an increase of 8% year-over-year

FY21 Total Bookings of $115.1 million, an increase of 43% year-over-year

CINCINNATI, OH, August 31, 2021 – Paycor HCM, Inc. (NASDAQ: PYCR) (“Paycor HCM,” “Paycor” or the “Company”) today announced its financial results for its fourth quarter and fiscal year 2021, which ended June 30, 2021.

“Paycor finished fiscal year 2021 with terrific momentum across our business, highlighted by 21% growth in recurring and other revenue in the fourth quarter of fiscal 2021, and bolstered by record bookings performance for the year,” said Raul Villar, Chief Executive Officer of Paycor HCM. “Our focus on empowering business leaders to produce actionable, real-time insights that help to optimize talent management and employee engagement is resonating with customers and driving strong adoption of our platform.”

Villar continued, “The success of our recent IPO was an important milestone for Paycor. We are well positioned to continue investing in our suite of HCM solutions and expanding our sales coverage. We are in the early stages of a multi-billion dollar market opportunity and are confident in Paycor’s ability to deliver high levels of profitable growth for the foreseeable future.”

Fourth Quarter Fiscal Year 2021 Financial Highlights

Total revenue was $88.0 million for the fourth quarter of fiscal 2021, compared to $73.4 million for the fourth quarter of fiscal 2020.

Operating loss was $32.3 million for the fourth quarter of fiscal 2021, compared to $29.9 million for the fourth quarter of fiscal 2020.

Adjusted operating income* was $0.2 million for the fourth quarter of fiscal 2021, compared to $11.4 million for the fourth quarter of fiscal 2020.

Net loss attributable to Paycor HCM was $32.8 million for the fourth quarter of fiscal 2021, compared to $25.3 million for the fourth quarter of fiscal 2020.

Adjusted net income attributable to Paycor HCM* was $0.1 million for the fourth quarter of fiscal 2021, compared to $11.2 million for the fourth quarter of fiscal 2020.

Fiscal Year 2021 Financial Highlights

Total revenue was $352.8 million for fiscal year 2021, compared to $327.9 million for fiscal year 2020.

Operating loss was $89.3 million for fiscal year 2021, compared to $94.7 million for fiscal year 2020.

Adjusted operating income* was $48.0 million for fiscal year 2021, compared to $46.3 million for fiscal year 2020.

Net loss attributable to Paycor HCM was $96.9 million for fiscal year 2021, compared to $90.2 million for fiscal year 2020.

Adjusted net income attributable to Paycor HCM* was $33.5 million for fiscal year 2021, compared to $35.1 million for fiscal year 2020.

*Adjusted operating income and adjusted net income attributable to Paycor HCM are non-GAAP financial measures. Please see the discussion below under the heading "Non-GAAP Financial Measures" and the reconciliations at the end of this press release for information concerning these and other non-GAAP financial measures.





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Fourth Quarter and Recent Business Highlights

In July 2021, the Company completed its initial public offering. Paycor sold 21.3 million shares of its common stock, inclusive of the underwriters’ exercise of 2.8 million shares of its overallotment option, at a price of $23.00 per share, for total net proceeds of $458.7 million. The Company used a portion of the net proceeds to redeem the Series A Redeemable Preferred Stock noncontrolling interest for approximately $260.0 million as well as repay all outstanding borrowings under our revolving credit facility. Additional proceeds will be used to fuel the Company’s mission of empowering leaders to build winning teams.

As of June 30, 2021, Paycor had over 28,000 total customers and more than 2.0 million customer employees.

For fiscal year 2021, we partnered with more than 1,300 brokers across the country, growing our total broker bookings by more than 100% compared to fiscal year 2020 and representing 40% of our total bookings.

In April 2021, Paycor launched the Recognition feature as part of the HR product offering, allowing leaders and peers to recognize the efforts of their teams directly through the platform. This feature provides leaders with another method of motivating and engaging their teams.

Business Outlook

Based on information as of today, August 31, 2021, the Company is issuing the following financial guidance:
Quarter Ending September 30, 2021:

Total revenue in the range of $89.0 million to $90.0 million.

Adjusted operating income* in the range of $1.0 million to $1.5 million.

Fiscal Year Ending June 30, 2022:

Total revenue in the range of $396.0 million to $400.0 million.

Adjusted operating income* in the range of $30.0 million to $32.0 million.

*We are unable to reconcile forward-looking adjusted operating income to forward-looking loss from operations, the most closely comparable GAAP financial measure because the information needed to provide a complete reconciliation is unavailable at this time without unreasonable effort.

Conference Call Information

Paycor will host a conference call today, August 31, 2021, at 5:00 p.m. (Eastern Time) to discuss the Company’s financial results and financial guidance. To access this call, dial 877-407-4018 (domestic) or 201-689-8471 (international). The conference ID number is 13722470. A live webcast of this conference call will be available on the “Investor Relations” page (https://investors.paycor.com/) and a replay will be archived on the website as well.

About Paycor HCM, Inc.

Paycor creates Human Capital Management (HCM) software for leaders who want to make a difference. Our HCM platform modernizes every aspect of people management, from the way you recruit, onboard and develop people, to the way you pay and retain them. But what really sets us apart is our focus on business leaders. For 30 years, we’ve been listening to and partnering with leaders, so we know what they need: HR technology that saves time, powerful analytics that provide actionable insights and dedicated support from HR experts. That’s why more than 28,000 customers representing over 40,000 medium & small businesses trust Paycor to help them solve problems and achieve their goals.

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,”



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“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 prospectus, dated July 20, 2021, filed in connection with our initial public offering, as well as in our other filings with the Securities and Exchange Commission. We believe that these risks include, but are not limited to: our ability to manage our growth effectively; 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; our ability to innovate and deliver high-quality, technologically advanced products and services; our relationships with third parties; the proper operation of our software; future acquisitions of other companies’ businesses, technologies, or customer portfolios; the impact of COVID-19 on our business; and those risks described in our prospectus, dated July 20, 2021, filed in connection with our initial public offering, as well as in our our other filings with the Securities and Exchange Commission. 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 and on the related teleconference call: 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 and adjusted net income attributable to Paycor HCM, Inc. 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, stock-based compensation expenses, and certain corporate expenses, in each case that are included in costs of recurring revenues, (ii) adjusted gross profit margin as adjusted gross profit divided by total revenues, (iii) adjusted operating income as loss from operations before amortization of acquired intangible assets, stock-based award and liability incentive award compensation expenses, and other certain corporate expenses, such as costs related to acquisitions, including the Apax acquisition, (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 stock-based award and liability incentive award compensation expenses and other certain corporate expenses, (vi) adjusted general and administrative expense as general and administrative expenses before amortization of acquired intangible assets, stock-based award and liability incentive award compensation expenses, and other certain corporate expenses, (vii) adjusted research and development expense as research and development expenses before stock-based award and liability incentive award compensation expenses and other certain corporate expenses and (viii) adjusted net income attributable to Paycor HCM, Inc. as net loss attributable to Paycor HCM, Inc. before the accretion of redeemable noncontrolling interests, amortization of acquired intangible assets, stock-based award and liability incentive award compensation expenses, gain or loss on the extinguishment of debt, and other certain corporate expenses, such as costs related to acquisitions, including the Apax acquisition.

The non-GAAP financial measures presented in this press release and discussed on the related teleconference call are not measures of financial performance under GAAP and should not be considered a substitute for gross profit, gross margin, operating income, operating income margin, sales and marketing expense, general and administrative expense, research and development expense and net income attributable to Paycor HCM, Inc. 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 Contact:
Brian Denyeau
ICR, LLC
646-277-1251
IR@paycor.com

Media Contact:
Katy Bunn
513-338-2398
PR@paycor.com



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Paycor HCM, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(in thousands, except share amounts)
 
June 30,
2021
June 30,
2020
Assets 
Current assets:  
Cash and cash equivalents$2,634 $828 
Restricted cash and short-term investments— 12,017 
Accounts receivable, net16,472 10,019 
Deferred contract costs24,503 14,015 
Prepaid expenses6,586 4,928 
Other current assets1,516 3,819 
Current assets before funds held for clients51,711 45,626 
Funds held for clients670,315 614,115 
Total current assets722,026 659,741 
Property and equipment, net41,080 44,011 
Goodwill750,802 733,801 
Intangible assets, net355,323 462,527 
Capitalized software, net31,310 23,106 
Long-term deferred contract costs90,880 57,907 
Other long-term assets19,532 26,690 
Total assets$2,010,953 $2,007,783 
Liabilities, Redeemable Noncontrolling Interest and Stockholder’s Equity 
Current liabilities:  
Accounts payable$11,978 $12,029 
Accrued expenses and other current liabilities15,782 10,296 
Accrued payroll and payroll related expenses32,305 16,215 
Liability incentive awards— 11,842 
Deferred revenue11,948 10,223 
Revolving line-of-credit— 5,001 
Current portion of long-term debt— 849 
Current liabilities before client fund obligations72,013 66,455 
Client fund obligations669,960 613,151 
Total current liabilities741,973 679,606 
Deferred income taxes76,138 104,770 
Other long-term liabilities16,680 18,162 
Long-term debt, net49,100 18,585 
Total liabilities883,891 821,123 
Commitments and contingencies  
Redeemable noncontrolling interest248,423 233,335 
Stockholder’s equity:
Common stock $0.001 par value per share, 500,000,000 shares authorized, 141,097,740 shares outstanding at June 30, 2021 and 151,718,000 outstanding at June 30, 2020, respectively141 152 
Treasury stock, at cost, 10,620,260 and 0 shares at June 30, 2021 and June 30, 2020, respectively(245,074)— 
Preferred stock, $0.001 par value, 10,000 shares authorized, 7,715 and 0 shares outstanding at June 30, 2021 and June 30, 2020, respectively262,772 — 
Additional paid in capital1,133,399 1,129,216 
Accumulated deficit(275,751)(178,813)
Accumulated other comprehensive income3,152 2,770 
Total stockholder’s equity878,639 953,325 
Total liabilities, redeemable noncontrolling interest and stockholder’s equity$2,010,953 $2,007,783 



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 Paycor HCM, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(in thousands, except share amounts)





 Three Months Ended Year Ended
 June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Revenues:  
Recurring and other revenue$87,584 $72,263 $350,956 $317,620 
Interest income on funds held for clients429 1,097 1,821 10,289 
Total revenues88,013 73,360 352,777 327,909 
Cost of revenues41,981 34,182 154,487 139,683 
Gross profit46,032 39,178 198,290 188,226 
Operating expenses:
Sales and marketing30,259 25,028 106,123 99,998 
General and administrative38,566 34,107 145,480 137,071 
Research and development9,513 9,948 36,020 45,866 
Total operating expenses78,338 69,083 287,623 282,935 
Loss from operations(32,306)(29,905)(89,333)(94,709)
Other (expense) income:
Interest expense(694)(377)(2,541)(1,780)
Other(1,740)2,566 (1,420)9,004 
Loss before benefit for income taxes(34,740)(27,716)(93,294)(87,485)
Income tax benefit(8,468)(7,563)(20,812)(20,182)
Net loss(26,272)(20,153)(72,482)(67,303)
Less: Accretion of redeemable noncontrolling interests6,538 5,109 24,438 22,890 
Net loss attributable to Paycor HCM, Inc.$(32,810)$(25,262)$(96,920)$(90,193)
Basic and diluted net loss attributable to Paycor HCM, Inc. per share$(0.23)$(0.17)$(0.66)$(0.59)
Weighted-average common shares outstanding:
Basic and diluted141,097,740 151,718,000 146,364,225 151,718,000 



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 Paycor HCM, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 
 Year Ended
 June 30, 2021June 30, 2020
Cash flows from operating activities:  
Net loss$(72,482)$(67,303)
Adjustments to reconcile net loss to net cash provided / (used) by operating activities:
Depreciation6,947 5,462 
Amortization of intangible assets and software139,354 127,755 
Amortization of deferred contract costs19,501 10,206 
Stock-based compensation expense4,172 4,906 
Amortization of debt acquisition costs637 620 
Deferred tax benefit(21,022)(20,181)
Bad debt expense1,791 1,812 
Gain on sale of investments(127)(2,513)
Gain on foreign currency exchange(755)— 
Loss (gain) on extinguishment of debt1,806 (6,240)
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable(7,731)(2,584)
Prepaid expenses and other current assets962 1,238 
Other long-term assets(1,726)(240)
Accounts payable(244)(1,407)
Accrued liabilities5,430 (13,973)
Deferred revenue(1,350)5,500 
Other long-term liabilities(1,428)8,808 
Deferred contract costs(62,962)(51,778)
Net cash provided by operating activities10,773 88 
Cash flows from investing activities:
Purchases of client funds available-for-sale securities(237,054)(571,385)
Proceeds from sale and maturities of client funds available-for-sale securities235,768 722,588 
Purchase of property and equipment(3,335)(7,833)
Acquisition of intangible assets(9,252)(2,995)
Acquisition of Paltech Solutions, Inc., net of cash acquired(16,740)— 
Internally developed software costs(21,968)(18,846)
Net cash (used) / provided by investing activities(52,581)121,529 
Cash flows from financing activities:
Net change in cash and cash equivalents held to satisfy client funds obligations25,983 (29,803)
Capital contribution to Apax Transaction— (63)
Payment of contingent consideration(3,000)— 
Proceeds from promissory note with related party64,989 — 
Repayment of promissory note with related party(64,989)— 
Proceeds from line-of-credit107,020 114,127 
Repayments of line-of-credit(62,921)(109,126)
Proceeds from debt25,000 20,000 
Repayments of debt(44,517)(15,886)
Proceeds from issuance of preferred stock, net262,772 — 
Purchase of treasury stock at cost(245,074)— 
Dividends paid to noncontrolling interests(9,350)— 
Other financing activities(597)(129)
Net cash provided / (used) by financing activities55,316 (20,880)
Impact of foreign exchange on cash and cash equivalents44 — 
Net change in cash, cash equivalents, restricted cash and short-term investments, and funds held for clients13,552 100,737 
Cash, cash equivalents, restricted cash and short-term investments, and funds held for clients, beginning of year546,448 445,711 
Cash, cash equivalents, restricted cash and short-term investments, and funds held for clients, end of year$560,000 $546,448 
Supplemental disclosure of non-cash investing, financing and other cash flow information:
Capital expenditures in accounts payable$129 $1,032 
Cash paid during the year for interest$1,347 $823 



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Reconciliation of cash, cash equivalents, restricted cash and short-term investments, and funds held for clients to the Consolidated Balance Sheets
Cash and cash equivalents$2,634 $828 
Restricted cash and short-term investments— 12,017 
Funds held for clients557,366 533,603 
Total cash, cash equivalents, restricted cash and short-term investments, and funds held for clients$560,000 $546,448 





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Reconciliations of Non-GAAP Measures to GAAP Measures

Adjusted Gross Profit and Adjusted Gross Profit Margin (Unaudited)
Three Months EndedYear Ended
(in thousands)June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Gross Profit*$46,032 $39,178 $198,290 $188,226 
Gross Profit Margin52.3 %53.4 %56.2 %57.4 %
Amortization expense**11,567 11,336 46,636 43,493 
Corporate adjustments***— 774 — 1,658 
Adjusted Gross Profit*$57,599 $51,288 $244,926 $233,377 
Adjusted Gross Profit Margin65.4 %69.9 %69.4 %71.2 %

*Gross Profit and Adjusted Gross Profit are burdened by depreciation expense of $0.7 million and $0.7 million for the three months ended June 30, 2021 and 2020, respectively, and $2.6 million and $2.5 million for the fiscal years ended June 30, 2021 and 2020, respectively. Gross Profit and Adjusted Gross Profit are burdened by amortization of capitalized software of $4.2 million and $2.3 million for the three months ended June 30, 2021 and 2020, respectively, and $13.8 million and $6.9 million for the fiscal years ended June 30, 2021 and 2020, respectively. Gross Profit and Adjusted Gross Profit are burdened by amortization of deferred contract costs of $3.2 million and $1.9 million for the three months ended June 30, 2021 and 2020, respectively, and $10.6 million and $5.7 million for the fiscal years ended June 30, 2021 and 2020, respectively.
**Amortization expense includes amortization of stock-based compensation expense and intangible assets.
***Corporate adjustments for the three months ended June 30, 2020 relate primarily to costs associated with implementing certain expense saving initiatives as a result of the COVID-19 pandemic. Corporate adjustments for the fiscal year ended June 30, 2020 primarily related to certain costs related to the transition of the new executive leadership team and closure of a standalone facility of $0.7 million and $0.9 million of costs related to implementing certain expense saving initiatives as a result of the COVID-19 pandemic.

Adjusted Operating Income (Unaudited)
Three Months EndedYear Ended
(in thousands)June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Loss from Operations$(32,306)$(29,905)$(89,333)$(94,709)
Operating Margin(36.7)%(40.8)%(25.3)%(28.9)%
Amortization expense*30,899 35,197 129,762 125,768 
Liability incentive award compensation expense(257)266 (189)3,055 
Corporate adjustments**1,883 5,805 7,747 12,149 
Adjusted Operating Income$219 $11,363 $47,987 $46,263 
Adjusted Operating Income Margin0.2 %15.5 %13.6 %14.1 %

*Amortization expense includes amortization of stock-based compensation and intangible assets.
**Corporate adjustments for the three months ended June 30, 2021 relate to certain costs associated with our efforts to become a public company, including the implementation of a new enterprise-resource planning system and professional, consulting, and other costs of $1.2 million, costs related to implementing certain saving and other initiatives as a result of the COVID-19 pandemic totaling $0.5 million, and transaction expenses and costs associated with the 7Geese acquisition and other acquisitions totaling $0.2 million. Corporate adjustments for the three months ended June 30, 2020 relate to certain costs related to the transition of the new executive leadership team and closure of a standalone facility of $1.7 million, costs associated with our efforts to become a public company, including the implementation of a new enterprise-resource planning system and professional, consulting, and other costs of $0.5 million, transaction expenses and costs associated with acquisitions totaling $0.2 million, and costs related to implementing certain saving initiatives as a result of the COVID-19 pandemic totaling $3.4 million. Corporate adjustments for the fiscal years ended June 30, 2021 and 2020 relate to certain costs related to the transition of the new executive leadership team and closure of a standalone facility of $1.0 million and $6.0 million, respectively, as well as costs associated with our efforts to become a public company, including the implementation of a new enterprise-resource planning system and professional, consulting, and other costs of $5.5 million and $2.2 million, respectively, transaction expenses and costs associated with the 7Geese acquisition and other acquisitions totaling $0.7 million and $0.5 million, respectively, and costs related to implementing certain expense saving and other initiatives related to the COVID-19 pandemic totaling $0.5 million and $3.4 million, respectively.




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Adjusted Operating Expenses (Unaudited)
Three Months EndedYear Ended
(in thousands)June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Sales and Marketing expense$30,259 $25,028 $106,123 $99,998 
Amortization expense*378 (1,666)(1,359)(1,666)
Liability incentive award compensation expense90 — 90 — 
Corporate adjustments**(522)(1,247)(1,120)(2,528)
Adjusted Sales and Marketing expense$30,205 $22,115 $103,734 $95,804 
General and Administrative expense$38,566 $34,107 $145,480 $137,071 
Amortization expense*(19,718)(21,426)(81,661)(79,840)
Liability incentive award compensation expense112 (266)44 (3,055)
Corporate adjustments***(1,311)(2,628)(6,515)(6,499)
Adjusted General and Administrative expense$17,649 $9,787 $57,348 $47,677 
Research and Development expense$9,513 $9,948 $36,020 $45,866 
Amortization expense*24 (769)(90)(769)
Liability incentive award compensation expense39 — 39 — 
Corporate adjustments****(50)(1,156)(112)(1,464)
Adjusted Research and Development expense$9,526 $8,023 $35,857 $43,633 

*Amortization expense includes amortization of stock-based compensation and intangible assets.
**Corporate adjustments for the three months ended June 30, 2021 and 2020 primarily relate to costs associated with implementing certain expense saving and other initiatives related to the COVID-19 pandemic totaling $0.5 million and $0.7 million. Corporate adjustments for the three months ended June 30, 2020 also include costs related to the transition of the new executive leadership team and closure of a standalone facility of $0.5 million. Corporate adjustments for the fiscal year ended June 30, 2021 and 2020 relate to certain costs related to the transition of the new executive leadership team and closure of a standalone facility of $0.6 million and $1.8 million, respectively, as well as costs related to implementing certain expense saving and other initiatives as a result of the COVID-19 pandemic totaling $0.5 million and $0.7 million, respectively.
***Corporate adjustments for the three months ended June 30, 2021 and 2020 relate to certain costs associated with our efforts to become a public company, including the implementation of a new enterprise-resource planning system and professional, consulting, and other costs, of $1.2 million and $0.4 million, respectively. Corporate adjustments for the three months ended June 30, 2021 also include costs associated with the 7Geese acquisition totaling $0.1 million. Corporate adjustments for the three months ended June 30, 2020 also include costs related to the transition of the new executive leadership team and closure of a standalone facility of $1.3 million and costs related to implementing certain expense saving initiatives as a result of the COVID-19 pandemic totaling $0.9 million. Corporate adjustments for the fiscal years ended June 30, 2021 and 2020 relate to certain costs related to the transition of the new executive leadership team and closure of a standalone facility of $0.4 million and $3.3 million, respectively, as well as costs associated with our efforts to become a public company, including the implementation of a new enterprise-resource planning system and professional, consulting, and other costs, of $5.5 million and $2.0 million, respectively, and transaction expenses and costs associated with the 7Geese acquisition and other acquisitions totaling $0.6 million and $0.3 million, respectively. Corporate adjustments for the fiscal year ended June 30, 2020 also include costs related to implementing certain expense saving initiatives as a result of the COVID-19 pandemic totaling $0.9 million.
****Corporate adjustments for the three months ended June 30, 2021 and 2020 relate to costs associated with the 7Geese acquisition and other acquisitions of $0.1 million and $0.2 million, respectfully. Corporate adjustments for the three months ended June 30, 2020 also include costs related to implementing certain expense saving initiatives as a result of the COVID-19 pandemic totaling $1.0 million. Corporate adjustments for the fiscal years ended June 30, 2021 and 2020 relate to costs associated with the 7Geese acquisition and other acquisitions of $0.1 million and $0.2 million, respectively. Corporate adjustments for the fiscal year ended June 30, 2020 also relate to certain costs related to the transition of the new executive leadership team and closure of a standalone facility of $0.3 million and costs related to implementing certain expense saving initiatives as a result of the COVID-19 pandemic totaling $1.0 million.

Adjusted Net Income Attributable to Paycor HCM, Inc. (Unaudited)
Three Months EndedYear Ended
(in thousands)June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Net loss attributable to Paycor HCM, Inc.$(32,810)$(25,262)$(96,920)$(90,193)
Accretion of redeemable noncontrolling interests6,538 5,109 24,438 22,890 
Loss (gain) on extinguishment of debt2,195 — 2,195 (6,240)
Amortization expense*30,899 35,197 129,762 125,768 
Liability incentive award compensation expense(257)266 (189)3,055 
Corporate adjustments**1,883 5,805 7,747 12,149 
Income tax effect on adjustments***(8,333)(9,905)(33,484)(32,336)
Adjusted Net Income Attributable to Paycor HCM, Inc.$115 $11,210 $33,549 $35,093 

*Amortization expense includes amortization of stock-based compensation and intangible assets.
**Corporate adjustments for the three months ended June 30, 2021 relate to certain costs associated with our efforts to become a public company, including the implementation of a new enterprise-resource planning system and professional, consulting, and other costs of $1.2 million, costs related



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to implementing certain saving and other initiatives as a result of the COVID-19 pandemic totaling $0.5 million, and transaction expenses and costs associated with the 7Geese acquisition and other acquisitions totaling $0.2 million. Corporate adjustments for the three months ended June 30, 2020 relate to certain costs related to the transition of the new executive leadership team and closure of a standalone facility of $1.7 million, costs associated with our efforts to become a public company, including the implementation of a new enterprise-resource planning system and professional, consulting, and other costs of $0.5 million, transaction expenses and costs associated with acquisitions totaling $0.2 million, and costs related to implementing certain saving initiatives as a result of the COVID-19 pandemic totaling $3.4 million. Corporate adjustments for the fiscal years ended June 30, 2021 and 2020 relate to certain costs related to the transition of the new executive leadership team and closure of a standalone facility of $1.0 million and $6.0 million, respectively, as well as costs associated with our efforts to become a public company, including the implementation of a new enterprise-resource planning system and professional, consulting, and other costs of $5.5 million and $2.2 million, respectively, transaction expenses and costs associated with the 7Geese acquisition and other acquisitions totaling $0.7 million and $0.5 million, respectively, and costs related to implementing certain expense saving and other initiatives related to the COVID-19 pandemic totaling $0.5 million and $3.4 million, respectively.
***All of the adjustments, except for the accretion of redeemable noncontrolling interests, are adjusted for the effect of income taxes using a 24% statutory tax rate for the periods presented.



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