Earnings results often give us a good indication of what direction the company take in the months ahead. With Q2 now behind us, let’s have a look at Paylocity (NASDAQ:PCTY) 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 Q2; on average, revenues beat analyst consensus estimates by 3.51%, while on average next quarter revenue guidance was 2.8% above consensus. There has been a stampede out of high valuation technology stocks as raising interest rates encourage investors to value profits over growth again, but HR software stocks held their ground better than others, with share prices down 3.41% since the previous earnings results, on average.
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 $228.9 million, up 36.7% year on year, beating analyst expectations by 5.04%. It was a strong quarter for the company, with very optimistic guidance for the next quarter and full year guidance beating analysts' expectations.
“Recurring & other revenue grew 34% in fiscal 22 as our value proposition of providing the most modern software in the industry continues to resonate in the marketplace. Our products focused on the Modern Workforce have all seen significant increases in utilization, including Community, where monthly users has grown by more than 40% and video creation increased by over 80% in fiscal 22,” said Steve Beauchamp, Co-Chief Executive Officer of Paylocity.
Paylocity achieved the fastest revenue growth and highest full year guidance raise of the whole group. The stock is down 4.22% since the results and currently trades at $216.9.
Is now the time to buy Paylocity? 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 full year guidance beating analysts' expectations and a solid beat of analyst estimates.
Paycor delivered the strongest analyst estimates beat among its peers. The stock is down 6.17% since the results and currently trades at $29.01.
Is now the time to buy Paycor? Access our full analysis of the earnings results here, it's free.
Slowest Q2: 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 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 2.8% since the results and currently trades at $5.31.
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 down 4.99% since the results and currently trades at $55.78.
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 5.89% since the results and currently trades at $318.31.
The author has no position in any of the stocks mentioned