Paycor HCM (NASDAQ:PYCR) is a cloud-based human capital management (HCM) company with a platform that features a range of payroll and human resources software tools for clients. The company's software enables numerous core HCM services, primarily for small to mid-sized businesses.
These include online payroll processing, tax compliance, employee record management, onboarding, benefits enrollment, talent acquisition, expense management, and performance management. Paycor stock's software is highly customizable and also features integrations with third-party applications to enable the best possible experience for its clients.
NASDAQ: PYCR
Key Data Points
Paycor was founded by Bob Coughlin in 1990 in Cincinnati, Ohio. In the early days, Coughlin wrote a 20-page business plan and invested $50,000 into the company from his own 401(k) to get Paycor off the ground. He also raised $200,000 in capital in the early days by selling shares of $500 to family and friends and taking out a small business loan.
Today, the company's software solutions support over 2.5 million users across 50 states, serving over 50,000 businesses nationwide. The company has grown rapidly through internal business development and a series of acquisitions. Paycor held its initial public offering (IPO) in 2021 and surpassed $400 million in annual revenue in its first year as a publicly traded company. In fiscal 2024, it surpassed $600 million in annual revenue.
In this deep dive into investing in Paycor stock, we'll explore how to buy shares of the business, whether it deserves your investment cash, how to invest in the stock through an exchange-traded fund (ETF), and more.
Exchange-Traded Fund (ETF)
How to buy Paycor stock
Because Paycor is publicly traded, the process of buying shares is very similar to what it would be if you were buying shares of any other public company. Here's what you need to know to add shares of Paycor to your portfolio.
Step 1: Open your brokerage app
Log into your brokerage account where you handle your investments. If you don't already have a brokerage account, opening one takes just a few minutes. You'll want to be sure you select a reputable firm that offers you a range of trading options to suit your investment needs.
Examples of popular brokerage options include Fidelity, Interactive Brokers (IBKR -2.32%), and Robinhood (HOOD -3.50%). Take the time to study the pros and cons of each platform so you can decide what is right for you.
You might want to consider factors such as account features, fees and commissions, account protection and security options, minimum account balance requirements, and customer service options.
Step 2: Search for the stock
Enter the ticker PYCR or enter the Paycor name into the search bar to bring up the stock's trading page. You should have already funded your account by this point and be ready to buy shares.
Step 3: Decide how many shares to buy
Consider your investment goals and how much of your portfolio you want to allocate to Paycor stock. It's wise to make a consistent habit of adding cash to great stocks on a regular basis through both market ups and downs. You shouldn't invest funds that you'll need for bills or other financial commitments in the near future.
Instead, you should be putting cash into your portfolio that you can leave alone for at least three to five years. When determining how many shares of Paycor to buy, consider how the business and growth trajectory align with the personal financial goals you've set for your portfolio.
Step 4: Select order type
Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay. A market order will fill your order for Paycor stock at its current price.
A limit order will allow you to set the maximum price you're willing to pay for the stock. This means that the order may not execute if shares do not get to the threshold you've established. A market order is usually preferable to a limit order.
Step 5: Submit your order
When you're ready to submit your buy order, you should be well acquainted with Paycor as a business and have a firm conviction that it's a fitting addition to your portfolio. Take time to thoroughly research and understand any stock before you add it to your basket of investments.
If you have researched Paycor and have confirmed these details, then go ahead and submit your buy order.
Step 6: Review your purchase
Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly. Your goal should be to work towards building a portfolio of 25 or more stocks across various industries and sectors so you can benefit from proper diversification while not being overly concentrated in a particular area.
Should I invest in Paycor stock?
If you want to invest in the HCM software space, Paycor could be a choice worth considering to tap into the growth potential of this industry. The company derives its revenue almost entirely from recurring sources due to its software-as-a-service business model. Paycor makes most of its revenue from customers on a per-employee-per-month basis. This means that its subscription revenue from each customer varies, depending on factors such as how many employees the business has and the products or benefits that particular business provides to its employees.
Growth in its customer base and employee growth among its customers are both factors that increase Paycor's total revenue. Most of its revenue (92%) is attributable to its five HCM software bundles: HCM Cor (which includes HR and payroll services), talent acquisition, talent management, benefits administration, and workforce management. The company also makes revenue from nonrefundable implementation fees and interest income on funds it holds for clients.
Management estimates that Paycor's annual recurring market opportunity is around $40 billion in the U.S. and that the market will grow as the cohort of small and mid-sized businesses increases. In fiscal 2024, Paycor achieved sales coverage in the 50 largest U.S. cities to 55%, giving it a strong footprint nationwide but still plenty of room to grow.
Paycor's total revenue of $654.9 million in its fiscal 2024 represented an increase of 19% year over year. For growth-oriented tech investors looking at investing long-term in the HCM industry, Paycor stock is an established player that looks to have a considerable growth runway ahead. However, if you're an investor who prefers more value-oriented businesses in spaces that are less prone to economic cyclicality, you may prefer to look elsewhere.
Stock
Is Paycor profitable?
Paycor is not yet consistently profitable, although management has signaled the plan to achieve this goal by the end of the decade. It also reported negative cash flow at the end of 2024.
The company delivered positive net income of $6.2 million in the third quarter of its fiscal 2024 but was unprofitable in the final quarter and for the full year. Its overall net loss in fiscal 2024 came to $58.9 million, which was an improvement from the $93.2 million net loss it reported in fiscal 2023.
Fast forward to the first quarter of Paycor's fiscal 2025, and the company reported a net loss of $7.3 million, compared to $20.6 million one year ago. So, its net losses are shrinking, but the bottom line still has a way to go.
From a top-line perspective, total revenue in the first quarter of fiscal 2025 was $167.5 million, an increase of 17% from the first quarter of fiscal 2024.
Does Paycor pay a dividend?
Paycor does not pay a dividend, and management has not signaled an intention to pay one in the near future. A company should have sufficient net profits to pay dividends, and Paycor is still working to correct its bottom line to consistently be in positive territory.
Will Paycor stock split?
Paycor only went public in 2021 and has not executed a stock split in that time. Management has also not signaled any plans to execute a stock split.
Normally, a stock only splits if shares have risen to such a point that they have become unattainable to large swaths of investors. Shares of Paycor had not risen above $50 as of the end of 2024, so a stock split anytime soon seems unlikely.
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The bottom line on Paycor
Any investor looking at Paycor as a potential buy will have to decide whether the stock aligns with their overall goals and portfolio objectives. The company has a sizable footprint in the human capital management industry in the U.S., with penetration in core markets but considerable runway left.
The company has only been public since 2021, and despite having been in business for more than three decades, it is still working to get to consistent profitability. Net losses and negative cash flow are both issues for this business. So, if you're looking for a business in the human capital management industry that is already habitually profitable, you may need to look elsewhere.
Although shares are down since the IPO, the stock has risen more than 50% over the trailing-six-month period. Most of Paycor's revenue is from recurring sources, and revenue growth remains on a solid trajectory.
Improvements in the U.S. jobs market will be a notable needle-mover for Paycor and other businesses focused on human capital management. If you're looking at long-term investment of three to five years or longer and have a well-diversified portfolio, a more modest position in Paycor may make sense for your basket of stocks.
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