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 the HR software stocks have fared in Q3, starting with Asure (NASDAQ:ASUR).
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 HR software stocks we track reported a weak Q3; on average, revenues beat analyst consensus estimates by 2.5% while next quarter's revenue guidance was 3.5% below consensus. Stocks have been under pressure as inflation (despite slowing) makes their long-dated profits less valuable, but HR software stocks held their ground better than others, with share prices down 1.8% on average since the previous earnings results.
Best Q3: 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 $29.33 million, up 33.9% year on year, topping analyst expectations by 11.1%. It was a mixed quarter for the company, with an impressive beat of analysts' revenue estimates but underwhelming revenue guidance for the next quarter.
“We are excited to have delivered another strong performance for our Company in the third quarter with 34% organic growth in revenues and robust gains in gross margins versus the same period a year ago, which are the primary result of increased revenues and more efficient operations driven by the consolidation and standardization efforts across the Company,” said Asure Chairman and CEO Pat Goepel.
Asure achieved the biggest analyst estimates beat and fastest revenue growth of the whole group. The stock is up 5.5% since the results and currently trades at $9.03.
One of the oldest service providers in the industry, Paychex (NASDAQ:PAYX) offers its customers payroll and HR software solutions.
Paychex reported revenues of $1.26 billion, up 5.7% year on year, falling short of analyst expectations by 0.7%. It was a weak quarter for the company, with a miss of analysts' revenue estimates and a decline in its gross margin.
Paychex had the slowest revenue growth among its peers. The stock is down 4.3% since the results and currently trades at $122.3.
Is now the time to buy Paychex? Access our full analysis of the earnings results here, it's free.
Weakest Q3: 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 $406.3 million, up 21.6% year on year, falling short of analyst expectations by 1.2%. It was a weak quarter for the company, with full-year revenue guidance missing analysts' expectations and underwhelming revenue guidance for the next quarter.
Paycom had the weakest performance against analyst estimates and weakest full-year guidance update in the group. The stock is down 20.9% since the results and currently trades at $193.59.
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 $143.6 million, up 21.4% year on year, surpassing analyst expectations by 2.9%. It was a mixed quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its gross margin.
The stock is up 13.1% since the results and currently trades at $20.2.
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 $317.6 million, up 25.4% year on year, in line with analyst expectations. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and full-year.
The stock is down 11.2% since the results and currently trades at $152.49.
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The author has no position in any of the stocks mentioned