Earnings results often indicate what direction a company will take in the months ahead. With Q2 now behind us, let’s have a look at Paychex (NASDAQ:PAYX) and its peers.
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 weak Q2; on average, revenues were in line with analyst consensus estimates. while next quarter's revenue guidance was 2.3% below consensus. Stocks--especially those trading at higher multiples--had a strong end of 2023, but 2024 has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts, and while some of the HR software stocks have fared somewhat better than others, they collectively declined, with share prices falling 4.3% on average since the previous earnings results.
Best Q2: 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 $1.30 billion, up 5.3% year on year, in line with analysts' expectations. Overall, it was a slower quarter for the company with a decline in its gross margin. Looking ahead to the full year, revenue guidance was slightly below expectations but EPS guidance was slightly above.
President and Chief Executive Officer , John Gibson commented, “As we close out the fiscal year, I am pleased to report that Paychex delivered solid financial results, reflecting our ability to navigate changing market conditions by providing innovative HR technology and advisory solutions that deliver value for our clients and their employees and continually finding ways to operate more efficiently as a company. "
The stock is flat since reporting and currently trades at $124.46.
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Paycom (NYSE: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 $437.5 million, up 9.1% year on year, in line with analysts' expectations. It performed better than its peers, but it was unfortunately a slower quarter for the company with a decline in its gross margin and full-year revenue guidance missing analysts' expectations.
Although it had a great quarter compared its peers, the market seems unhappy with the results as the stock is down 5.2% since reporting. It currently trades at $158.04.
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 $357.3 million, up 15.8% year on year, exceeding analysts' expectations by 2.1%. It was a weak quarter for the company with management forecasting growth to slow and underwhelming revenue guidance for the next quarter.
Paylocity posted the weakest full-year guidance update in the group. Interestingly, the stock is up 3.4% since the results and currently trades at $153.32.
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 $28.04 million, down 7.8% year on year, falling short of analysts' expectations by 2%. Zooming out, it was a weak quarter for the company with a decline in its gross margin and full-year revenue guidance missing analysts' expectations.
Asure had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is down 18% since reporting and currently trades at $8.19.
Dayforce (NYSE: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 $423.3 million, up 15.7% year on year, surpassing analysts' expectations by 1.4%. More broadly, it was a weaker quarter for the company with a decline in its gross margin and decelerating customer growth.
Dayforce achieved the highest full-year guidance raise among its peers. The company added 82 customers to reach a total of 6,657. The stock is down 1.2% since reporting and currently trades at $53.06.
This content was originally published on Stock Story
