Radek Strnad
·4-min read
Wrapping up Q2 earnings, we look at the numbers and key takeaways for the HR software stocks, including Asure (NASDAQ:ASUR) 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 6 HR software stocks we track reported a weak Q2. As a group, revenues beat analysts’ consensus estimates by 0.7% while next quarter’s revenue guidance was 2.1% below.
Stocks, especially growth stocks with cash flows further into the future, had a good end of 2023. On the other hand, this year has seen more volatile stock market swings due to mixed inflation data. However, HR software stocks have held steady amidst all this with average share prices relatively unchanged since the latest earnings results.
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. This print fell short of analysts’ expectations by 2%. Overall, it was a weak quarter for the company with a decline in its gross margin and full-year revenue guidance missing analysts’ expectations.
Asure Chairman and CEO Pat Goepel commented “I’m pleased with our second quarter performance as our 18% growth in recurring revenue was made up of a healthy balance of both organic and inorganic, just as we laid out in our 2024 guidance.
Asure delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. Unsurprisingly, the stock is down 17.9% since reporting and currently trades at $8.20.
Read our full report on Asure here, it’s free.
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. It performed better than its peers, but it was unfortunately a slower quarter for the company with a decline in its gross margin.
The market seems content with the results as the stock is up 1.2% since reporting. It currently trades at $126.40.
Is now the time to buy Paychex? Access our full analysis of the earnings results here, it’s free.
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 5.2% since the results and currently trades at $155.95.
Read our full analysis of Paylocity’s results here.
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 $437.5 million, up 9.1% year on year, in line with analysts’ expectations. More broadly, it was a slower quarter for the company with a decline in its gross margin and full-year revenue guidance missing analysts’ expectations.
The stock is down 4% since reporting and currently trades at $160.
Read our full, actionable report on Paycom here, it’s free.
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 $423.3 million, up 15.7% year on year, surpassing analysts’ expectations by 1.4%. Revenue aside, it was a weaker quarter for the company with a decline in its gross margin and decelerating customer growth.
Dayforce pulled off the highest full-year guidance raise among its peers. The company added 82 customers to reach a total of 6,657. The stock is up 3.4% since reporting and currently trades at $55.50.
Read our full, actionable report on Dayforce here, it’s free.
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