Q2 Rundown: Paychex (NASDAQ:PAYX) Vs Other HR Software Stocks
Looking back on HR software stocks' Q2 earnings, we examine this quarter's best and worst performers, including Paychex (NASDAQ:PAYX) and its peers.
HR software benefits from dual trends around cost savings and ease of use. First is the SaaS-ification of businesses, large and small, who much prefer the flexibility of cloud-based, web-browser-delivered software paid for on a subscription basis than the hassle and expense of purchasing and managing on-premise enterprise software. Second is the consumerization of business software, whereby multiple standalone processes like payroll processing and compliance are aggregated into a single, easy-to-use platform.
The 6 HR software stocks we track reported a mixed Q2; on average, revenues beat analyst consensus estimates by 4.68% while next quarter's revenue guidance was 0.12% above consensus. There has been a stampede out of expensive technology stocks as higher interest rates encourage investors to value profits over growth, and while some of the HR software stocks have fared somewhat better than others, they have not been spared, with share prices declining 5.53% on average since the previous earnings results.
Paychex (NASDAQ:PAYX)
One of the oldest payroll service providers, Paychex provides payroll and human resource (HR) solutions.
Paychex reported revenues of $1.29 billion, up 6.62% year on year, in line with analyst expectations. It was a decent quarter for the company, with a meaningful improvement in its gross margin.
President and Chief Executive Officer, John Gibson commented, “We are off to a strong start for fiscal 2024 with 7% growth in total revenue and 11% for adjusted diluted earnings per share. Demand for our solutions remains strong as businesses continue to look to us for the technology and expertise to navigate today's rapidly changing business environment. In addition, by harnessing the power of Artificial Intelligence and leveraging our vast data sets, we are delivering more actionable insights to our clients, helping them make informed decisions on how to address today’s growing workforce and compliance challenges.”
Paychex delivered the slowest revenue growth of the whole group. The stock is up 5.32% since the results and currently trades at $118.73.
Is now the time to buy Paychex? Access our full analysis of the earnings results here, it's free.
Best Q2: Asure (NASDAQ:ASUR)
Created from the merger of two small workforce management companies in 2007, Asure (NASDAQ:ASUR) provides cloud based payroll and HR software for small and medium-sized businesses (SMBs).
Asure reported revenues of $30.4 million, up 49.9% year on year, outperforming analyst expectations by 19.4%. It was an exceptional quarter for the company, with an impressive beat of analysts' revenue estimates and full-year revenue guidance exceeding analysts' expectations.
Asure pulled off the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The stock is down 33.6% since the results and currently trades at $8.9.
Is now the time to buy Asure? Access our full analysis of the earnings results here, it's free.
Weakest Q2: Paycor (NASDAQ:PYCR)
Found in 1990 in Cincinnati, Ohio, Paycor (NASDAQ: PYCR) provides software for small businesses to manage their payroll and HR needs in one place.
Paycor reported revenues of $140 million, up 26.2% year on year, exceeding analyst expectations by 2.59%. It was a weak quarter for the company, with underwhelming revenue guidance for the next year and underwhelming revenue guidance for the next quarter.
Paycor had the weakest full-year guidance update in the group. The stock is up 9.18% since the results and currently trades at $24.97.
Read our full analysis of Paycor's results here.
Paylocity (NASDAQ:PCTY)
Founded by payroll software veteran Steve Sarowitz in 1997, Paylocity (NASDAQ:PCTY) is a provider of payroll and human resources software for small and medium-sized enterprises.
Paylocity reported revenues of $308.5 million, up 34.7% year on year, surpassing analyst expectations by 2.29%. It was a mixed quarter for the company, with underwhelming revenue guidance for the next year and a decline in its gross margin.
The stock is down 4.19% since the results and currently trades at $203.79.
Read our full, actionable report on Paylocity here, it's free.
Ceridian (NYSE:CDAY)
Founded in 1992 as an outsourced payroll processor and transformed after the 2012 acquisition of Dayforce, Ceridian (NYSE:CDAY) is a provider of cloud based payroll and HR software targeted at mid-sized businesses.
Ceridian reported revenues of $365.9 million, up 21.5% year on year, surpassing analyst expectations by 2.13%. It was a weaker quarter for the company, with a decline in its gross margin and decelerating customer growth.
The company added 93,000 customers to a total of 6,272,000. The stock is up 10.8% since the results and currently trades at $74.24.
Read our full, actionable report on Ceridian here, it's free.
Join Paid Stock Investor Research
Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here.
The author has no position in any of the stocks mentioned
