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HR Software Stocks Q2 In Review: Paychex (NASDAQ:PAYX) Vs Peers


Jack Winthrop /
2022/10/25 2:53 am EDT
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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 have a look at how the HR software stocks have fared in Q2, starting with Paychex (NASDAQ:PAYX).

HR software benefits from dual trends around costs 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 platforms.

The 6 HR software stocks we track reported a solid Q2; on average, revenues beat analyst consensus estimates by 3.51%, while on average next quarter revenue guidance was 2.8% above consensus. Tech multiples have reverted to the historical mean after reaching all time levels in early 2021, but HR software stocks held their ground better than others, with share prices down 1.88% since the previous earnings results, on average.

Paychex (NASDAQ:PAYX)

One of the oldest payroll service providers, Paychex provides payroll and human resource (HR) solutions.

Paychex reported revenues of $1.2 billion, up 11.3% year on year, beating analyst expectations by 3.5%. It was a solid quarter for the company, with a significant improvement in gross margin and a decent beat of analyst estimates.

Martin Mucci, Chairman and CEO, commented, “We are off to a good start for fiscal 2023, achieving double-digit growth in revenue and earnings. The value proposition of our Human Capital Management ("HCM") technology and Paychex HR suite continues to resonate in the market, with notable strength in our mid-market, retirement, and HR solutions businesses.

Paychex Total Revenue

Paychex delivered the slowest revenue growth of the whole group. The stock is up 0.78% since the results and currently trades at $114.15.

Is now the time to buy Paychex? Access our full analysis of the earnings results here, it's free.

Best Q2: Paycor (NASDAQ:PYCR)

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 $110.9 million, up 26.1% year on year, beating analyst expectations by 7.26%. It was a very strong quarter for the company, with a full year guidance beating analysts' expectations and a solid beat of analyst estimates.

Paycor Total Revenue

Paycor achieved the strongest analyst estimates beat among its peers. The stock is down 6.08% since the results and currently trades at $29.04.

Is now the time to buy Paycor? Access our full analysis of the earnings results here, it's free.

Weakest: 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 Software reported revenues of $20.3 million, up 18.2% year on year, in line with analyst expectations. It was a weaker quarter for the company, with a decline in gross margin and a full year guidance missing analysts' expectations.

Asure Software had the weakest performance against analyst estimates and weakest full year guidance update in the group. The stock is up 1.26% since the results and currently trades at $5.23.

Read our full analysis of Asure Software's results here.

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 $301.2 million, up 20.2% year on year, beating analyst expectations by 2.27%. It was a decent quarter for the company, with a significant improvement in gross margin but decelerating customer growth.

The company added 119 customers to a total of 5,728. The stock is up 2.02% since the results and currently trades at $59.9.

Read our full, actionable report on Ceridian here, it's free.

Paycom Software (NYSE:PAYC)

Founded in 1998 as one of the first online payroll companies. Today, Paycom (NYSE:PAYC) provides software for small and medium-sized businesses (SMBs) to manage their payroll and HR needs in one place.

Paycom Software reported revenues of $316.9 million, up 30.8% year on year, beating analyst expectations by 2.7%. It was a decent quarter for the company, with very optimistic guidance for the next quarter but a decline in gross margin.

The stock is down 4.71% since the results and currently trades at $322.3.

Read our full, actionable report on Paycom Software here, it's free.

The author has no position in any of the stocks mentioned