What Happened:
Shares of online payroll and human resource software provider Paycor (NASDAQ:PYCR) jumped 8.2% in the morning session after the company reported second-quarter earnings results. Paycor beat analysts' revenue expectations. Adjusted operating income also beat and by a large amount and showed an impressive year-on-year margin increase. This signals profitable growth on Paycor's part. On the other hand, its full-year revenue guidance was below expectations, but the market seemed to focus on the positives.
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What is the market telling us:
Paycor’s shares are quite volatile and over the last year have had 10 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 12 months ago, when the stock dropped 6.1% on the news that the company reported fourth quarter results and provided revenue guidance for next year, which missed analysts' estimates. The full year (FY2024) revenue guidance points to a notable deceleration in demand, with an implied growth of 17.1% compared to the robust 28.6% in FY2023. Its revenue guidance for next quarter also missed Wall Street's estimates. Additionally, next quarter's adjusted operating profit guidance missed.
On the other hand, Paycor beat analysts' revenue and adjusted operating profit expectations for the quarter. Regardless, this was overshadowed by the unfavorable outlook shared by the company, leading to a negative market response.
Paycor is down 35.2% since the beginning of the year, and at $13.65 per share it is trading 46% below its 52-week high of $25.29 from October 2023. Investors who bought $1,000 worth of Paycor’s shares at the IPO in July 2021 would now be looking at an investment worth $522.61.
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