The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how hr software stocks fared in Q1, starting with Paychex (NASDAQ: PAYX).
Modern HR software has two powerful benefits: cost savings and ease of use. For cost savings, businesses large and small much prefer the flexibility of cloud-based, web-browser-delivered software paid for on a subscription basis rather than the hassle and complexity of purchasing and managing on-premise enterprise software. On the usability side, the consumerization of business software creates seamless experiences whereby multiple standalone processes like payroll processing and compliance are aggregated into a single, easy-to-use platform.
The 5 HR software stocks we track reported a satisfactory Q1. As a group, revenues beat analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was 3.6% below.
Thankfully, share prices of the companies have been resilient as they are up 5.2% on average since the latest earnings results.
Paychex (NASDAQ: PAYX)
One of the oldest service providers in the industry, Paychex (NASDAQ: PAYX) offers its customers payroll and HR software solutions.
Paychex reported revenues of $1.51 billion, up 4.8% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with EBITDA in line with analysts’ estimates.
Paychex delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. Interestingly, the stock is up 11% since reporting and currently trades at $159.96.
Is now the time to buy Paychex? Access our full analysis of the earnings results here, it’s free.
Best Q1: Paylocity (NASDAQ: PCTY)
Founded by payroll software veteran Steve Sarowitz in 1997, Paylocity (NASDAQ: PCTY) is a provider of payroll and HR software for small and medium-sized enterprises.
Paylocity reported revenues of $454.5 million, up 13.3% year on year, outperforming analysts’ expectations by 2.9%. The business had a very strong quarter with a solid beat of analysts’ EBITDA estimates.
Paylocity delivered the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $193.72.
Is now the time to buy Paylocity? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Dayforce (NYSE: DAY)
Founded in 1992 as Ceridian, an outsourced payroll processor and transformed after the 2012 acquisition of Dayforce, Dayforce (NYSE: DAY) is a provider of cloud based payroll and HR software targeted at mid-sized businesses.
Dayforce reported revenues of $481.8 million, up 11.7% year on year, exceeding analysts’ expectations by 1.1%. Still, it was a slower quarter as it posted revenue guidance for next quarter missing analysts’ expectations.
Dayforce delivered the weakest full-year guidance update in the group. Interestingly, the stock is up 1.7% since the results and currently trades at $59.20.
Read our full analysis of Dayforce’s results here.
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 $34.85 million, up 10.1% year on year. This number topped analysts’ expectations by 1.7%. Zooming out, it was a satisfactory quarter as it also produced an impressive beat of analysts’ EBITDA estimates.
The stock is down 1.8% since reporting and currently trades at $9.59.
Read our full, actionable report on Asure here, it’s free.
Paycom (NYSE: PAYC)
Founded in 1998 as one of the first online payroll companies, Paycom (NYSE: PAYC) provides software for small and medium-sized businesses (SMBs) to manage their payroll and HR needs in one place.
Paycom reported revenues of $530.5 million, up 6.1% year on year. This print surpassed analysts’ expectations by 0.9%. Overall, it was a very strong quarter as it also produced a solid beat of analysts’ EBITDA estimates and full-year EBITDA guidance exceeding analysts’ expectations.
The stock is up 15.3% since reporting and currently trades at $263.57.
Read our full, actionable report on Paycom here, it’s free.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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