As HR software stocks’ Q2 earnings season wraps, let's dig into this quarter's best and worst performers, including Paycom Software and its peers.
This article was originally published on Stock Story
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. Tech stocks have been under pressure as inflation makes their long-dated profits less valuable, and while some of the HR software stocks have fared somewhat better than others, they have not been spared, with share prices declining 6.92% on average since the previous earnings results.
Paycom Software (NYSE:PAYC)
Founded in 1998 as one of the first online payroll companies, Paycom provides software for small and medium-sized businesses (SMBs) to manage their payroll and HR needs in one place.
Paycom (NYSE:PAYC) reported revenues of $401.1 million, up 26.6% year on year, in line with analyst expectations. It was a slower quarter for the company, with a decline in its gross margin and underwhelming revenue guidance for the next quarter.
“We delivered another strong quarter, which was highlighted by strong revenue growth and margin expansion as demand for our differentiated HR and payroll solution continues to increase,” said Paycom’s founder, chairman and CEO, Chad Richison.
Paycom delivered the weakest performance against analyst estimates of the whole group. The stock is down 28.3% since the results and currently trades at $265.66.
Best Q2: Asure Software (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, beating 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 scored the strongest analyst estimates beat, fastest revenue growth, and highest full year guidance raise among its peers. The stock is down 34.4% since the results and currently trades at $8.79.
Weakest Q2: Paycor (NASDAQ:PYCR)
Found in 1990 in Cincinnati, Ohio Paycor, provides software for small businesses to manage their payroll and HR needs in one place.
Paycor (NASDAQ:PYCR) reported revenues of $140 million, up 26.2% year on year, beating 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 7.48% since the results and currently trades at $24.58.
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, beating 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 9.33% since the results and currently trades at $73.25.
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, beating 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 5.89% since the results and currently trades at $200.18.