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Winners And Losers Of Q1: Paychex (NASDAQ:PAYX) Vs The Rest Of The HR Software Stocks


Radek Strnad /
2022/07/22 3:22 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 Q1, 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 decent Q1; on average, revenues beat analyst consensus estimates by 2.82%, while on average next quarter revenue guidance was 1.31% above consensus. The technology sell-off has been putting pressure on stocks since November, but HR software stocks held their ground better than others, with the share price up 1.2% since earnings, on average.

Weakest Q1: Paychex (NASDAQ:PAYX)

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

Paychex reported revenues of $1.14 billion, up 11.1% year on year, beating analyst expectations by 3.34%. It was a weak quarter for the company, with a decline in gross margin and a slow revenue growth.

Martin Mucci, chairman and CEO, commented, “We are pleased with our fiscal 2022 results, which reflect strong business performance from our unique blend of human capital management ("HCM") solutions and the hard work and dedication of our 16,000 employees.

Paychex Total Revenue

Paychex delivered the slowest revenue growth of the whole group. The stock is up 1.86% since the results and currently trades at $122.05.

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

Best Q1: 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 $245.9 million, up 32.2% year on year, beating analyst expectations by 1.79%. It was a very strong quarter for the company, with a significant improvement in gross margin and a solid top-line growth.

Paylocity Total Revenue

Paylocity pulled off the fastest revenue growth among its peers. The stock is up 5.43% since the results and currently trades at $199.32.

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

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 $293.3 million, up 25% year on year, beating analyst expectations by 1.33%. It was a slower quarter for the company, with a decline in gross margin and decelerating customer growth.

Ceridian had the weakest performance against analyst estimates and weakest full year guidance update in the group. The company added 175 customers to a total of 5,609. The stock is down 8.61% since the results and currently trades at $55.58.

Read our full analysis of Ceridian's results here.

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 $24.3 million, up 22.8% year on year, beating analyst expectations by 3.26%. It was a mixed quarter for the company, with a decent beat of analyst estimates but an underwhelming revenue guidance for the next quarter.

The stock is down 4.45% since the results and currently trades at $5.79.

Read our full, actionable report on Asure Software 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 $353.5 million, up 29.8% year on year, beating analyst expectations by 3%. It was a strong quarter for the company, with a significant improvement in gross margin and a very optimistic guidance for the next quarter.

The stock is up 13.9% since the results and currently trades at $329.47.

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

The author has no position in any of the stocks mentioned