Looking back on HR software stocks' Q4 earnings, we examine the best and worst performers, including 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 3.36%, while on average next quarter revenue guidance was 0.81% above consensus. Tech stocks have been under pressure since the end of last year, but HR software stocks held their ground better than others, with share price down 3.99% since earnings, on average.
Best Q4: Paychex (NASDAQ:PAYX)
One of the oldest payroll service providers, Paychex provides payroll and human resource (HR) solutions.
Paychex reported revenues of $1.27 billion, up 14.7% year on year, beating analyst expectations by 4.64%. It was a strong quarter for the company, with a significant improvement in gross margin and a decent beat of analyst estimates.
Martin Mucci, Chairman and Chief Executive Officer, commented, “Our strong results for the third quarter, including double-digit growth in both revenue and earnings are a result of progress against key initiatives. We had a strong calendar year end and selling season, delivering a record quarter for new sales revenue and maintaining high levels of client retention. Our value proposition continues to resonate in the market with our unique blend of innovative Paychex Flex® technology and breadth of solutions to help small and mid-sized businesses.”
Paychex achieved the strongest analyst estimates beat but had the slowest revenue growth of the whole group. The stock is up 4.63% since the results and currently trades at $138.75.
Is now the time to buy Paychex? Access our full analysis of the earnings results here, it's free.
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 $282.1 million, up 26.6% year on year, beating analyst expectations by 2.56%. It was a solid quarter for the company, with accelerating customer growth and a decent beat of analyst estimates.
The stock is down 26.5% since the results and currently trades at $59.52.
Is now the time to buy Ceridian? Access our full analysis of the earnings results here, it's free.
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 $196 million, up 33.9% year on year, beating analyst expectations by 4.11%. It was a decent quarter for the company, with a strong top line growth but a decline in gross margin.
Paylocity achieved the fastest revenue growth and highest full year guidance raise in the group. The stock is up 1.6% since the results and currently trades at $199.93.
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 $103 million, up 20% year on year, beating analyst expectations by 3.56%. It was a good quarter for the company, with a very optimistic guidance for the next quarter.
The stock is up 8.25% since the results and currently trades at $27.14.
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 $21.1 million, up 28.4% year on year, beating analyst expectations by 2%. It was a solid quarter for the company, with a significant improvement in gross margin and a strong top line growth.
Asure Software had the weakest performance against analyst estimates and weakest full year guidance update among the peers. The stock is down 5.19% since the results and currently trades at $6.39.
The author has no position in any of the stocks mentioned