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Q1 Rundown: Paylocity (NASDAQ:PCTY) Vs Other HR Software Stocks


Adam Hejl /
2024/06/21 7:17 am EDT

As the Q1 earnings season comes to a close, it’s time to take stock of this quarter's best and worst performers in the hr software industry, including Paylocity (NASDAQ:PCTY) and its peers.

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 6 HR software stocks we track reported a slower Q1; on average, revenues beat analyst consensus estimates by 0.7%. while next quarter's revenue guidance was 0.5% below consensus. Stocks--especially those trading at higher multiples--had a strong end of 2023, but 2024 has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts, and HR software stocks have had a rough stretch, with share prices down 12.7% on average since the previous earnings results.

Paylocity (NASDAQ:PCTY)

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 $401.3 million, up 18.1% year on year, topping analysts' expectations by 1%. It was a solid quarter for the company, with a significant improvement in its gross margin and strong sales guidance for the next quarter.

“Our solid results continued into the third quarter of fiscal 2024, with total revenue growth of 18% and recurring & other revenue growth of 17% as our differentiated value proposition of providing the most modern software in the industry continues to resonate in the market. In Q3, we announced a series of enhancements to our talent acquisition suite to help clients more effectively recruit, train, and retain the newest entrants to the workforce, including AI-driven features that will help new hires automatically integrate and collaborate with their teams. This ongoing commitment to product innovation was recently recognized in the market, with Paylocity placing as an overall leader in 10 product categories in the G2 Spring 2024 Grid Reports. Additionally, because of our strong profitability and cash flows, our Board of Directors has approved a $500 million share repurchase program,” said Toby Williams, President and Co-Chief Executive Officer of Paylocity.

Paylocity Total Revenue

Paylocity pulled off the fastest revenue growth of the whole group. The stock is down 8.4% since the results and currently trades at $136.84.

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

Best Q1: Dayforce (NYSE:DAY)

Founded in 1992 as Ceridian, an outsourced payroll processor and transformed after the 2012 acquisition of Dayforce, Dayforce (NYSE:DAY) is a provider of cloud based payroll and HR software targeted at mid-sized businesses.

Dayforce reported revenues of $431.5 million, up 16.4% year on year, outperforming analysts' expectations by 1.3%. It was a solid quarter for the company, with accelerating customer growth and a significant improvement in its gross margin.

Dayforce Total Revenue

The stock is down 18.8% since the results and currently trades at $49.86.

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

Weakest Q1: Paychex (NASDAQ:PAYX)

One of the oldest service providers in the industry, Paychex (NASDAQ:PAYX) offers its customers payroll and HR software solutions.

Paychex reported revenues of $1.44 billion, up 4.2% year on year, falling short of analysts' expectations by 1.2%. It was a weak quarter for the company: Revenue unfortunately missed analysts' expectations, although EPS beat. With regards to the full year, revenue guidance missed expectations.

Paychex had the weakest performance against analyst estimates in the group. The stock is up 3.8% since the results and currently trades at $126.25.

Read our full analysis of Paychex'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 $187 million, up 15.8% year on year, in line with analysts' expectations. It was a weak quarter for the company, with full-year revenue guidance missing analysts' expectations and a miss of analysts' billings estimates.

Paycor had the weakest full-year guidance update among its peers. The stock is down 34.5% since the results and currently trades at $11.46.

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

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 $499.9 million, up 10.7% year on year, in line with analysts' expectations. It was a slower quarter for the company, with a decline in its gross margin.

The stock is down 21.9% since the results and currently trades at $145.58.

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

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