As we reflect back on the just completed Q4 HR software sector earnings season, we dig into the relative performance of Paychex (NASDAQ:PAYX) and its peers.
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 Q4; on average, revenues beat analyst consensus estimates by 4.05%, while on average next quarter revenue guidance was 1.39% above consensus. Investors abandoned cash burning companies since high interest rates will make it harder to raise capital, but HR software stocks held their ground better than others, with share prices down 1.06% 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 $1.38 billion, up 8.23% year on year, beating analyst expectations by 2.39%. It was a strong quarter for the company, with a significant improvement in gross margin and a decent beat of analyst estimates.
John Gibson, President and Chief Executive Officer, commented, “The third fiscal quarter reflected continued growth with 8% in total revenue and double digit adjusted diluted earnings per share. Solid execution throughout our calendar year-end and selling season resulted in growth in new sales and strong retention. "
Paychex delivered the slowest revenue growth of the whole group. The stock is up 1.29% since the results and currently trades at $110.35.
Is now the time to buy Paychex? Access our full analysis of the earnings results here, it's free.
Best Q4: 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 $33.1 million, up 35.9% year on year, beating analyst expectations by 12.1%. It was a stunning quarter for the company, with an impressive beat of analyst estimates and very optimistic guidance for the next quarter.
Asure Software scored the strongest analyst estimates beat and highest full year guidance raise among its peers. The stock is down 13.8% since the results and currently trades at $11.59.
Is now the time to buy Asure Software? Access our full analysis of the earnings results here, it's free.
Weakest Q4: 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 $370.6 million, up 26.4% year on year, beating analyst expectations by 2.6%. It was a weaker quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in gross margin.
Ceridian had the weakest full year guidance update in the group. The company added 186,000 customers to a total of 6,179,000. The stock is up 2.54% since the results and currently trades at $64.25.
Read our full analysis of Ceridian's results here.
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 $161.5 million, up 31.7% year on year, beating analyst expectations by 3.45%. It was a "beat and raise" quarter where revenue and operating profit beat, and the company also raised full-year guidance for both metrics.
The stock is down 2.2% since the results and currently trades at $22.27.
Read our full, actionable report on Paycor 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 human resources software for small and medium-sized enterprises.
Paylocity reported revenues of $339.9 million, up 38.2% year on year, beating analyst expectations by 2.03%. It was a decent quarter for the company, with a significant improvement in gross margin. Additionally, the revenue guidance for the full year was roughly in line with consensus.
Paylocity delivered the fastest revenue growth among the peers. The stock is down 2.58% since the results and currently trades at $178.92.
Read our full, actionable report on Paylocity here, it's free.
The author has no position in any of the stocks mentioned