Wrapping up Q1 earnings, we look at the numbers and key takeaways for the HR software stocks, including 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 Q1; on average, revenues beat analyst consensus estimates by 4.05%, while on average next quarter revenue guidance was 1.39% above consensus. Tech stocks have been under pressure as inflation makes their long-dated profits less valuable, but HR software stocks held their ground better than others, with the share prices up 0.68% 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 $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.
"Our overall momentum continued in the third quarter, with Q3 recurring & other revenue growth of 28% and total revenue growth of 38%, as our differentiated value proposition of providing the most modern software in the industry continues to resonate in the marketplace.” said Steve Beauchamp, Co-Chief Executive Officer of Paylocity.
Paylocity pulled off the fastest revenue growth of the whole group. The stock is down 1.05% since the results and currently trades at $181.74.
Is now the time to buy Paylocity? Access our full analysis of the earnings results here, it's free.
Best Q1: 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 12.1% since the results and currently trades at $11.81.
Is now the time to buy Asure Software? Access our full analysis of the earnings results here, it's free.
Weakest Q1: 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 slower 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 5.01% since the results and currently trades at $65.8.
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 up 1.62% since the results and currently trades at $23.14.
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.
Paychex had the slowest revenue growth among the peers. The stock is up 1.89% since the results and currently trades at $111.
The author has no position in any of the stocks mentioned