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Q2 Earnings Outperformers: Workday (NASDAQ:WDAY) And The Rest Of The Finance and HR Software Stocks


Jabin Bastian /
2023/09/25 6:36 am EDT

Quarterly earnings results are a good time to check in on a company’s progress, especially compared to other peers in the same sector. Today we are looking at Workday (NASDAQ:WDAY), and the best and worst performers in the finance and HR software group.

Organizations are constantly looking to improve organizational efficiencies, whether it is financial planning, tax management or payroll. Finance and HR software benefit from 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.

The 14 finance and HR software stocks we track reported a mixed Q2; on average, revenues beat analyst consensus estimates by 4.09%, while on average next quarter revenue guidance was 0.15% above consensus. Tech stocks have been under pressure as inflation makes their long-dated profits less valuable, and while some of the finance and HR software stocks have fared somewhat better than others, they have not been spared, with share prices declining 5.51% since the previous earnings results, on average.

Workday (NASDAQ:WDAY)

Founded by industry veterans Aneel Bushri and Dave Duffield after their former company PeopleSoft was acquired by Oracle in a hostile takeover, Workday (NASDAQ:WDAY) provides cloud-based software for organizations to manage and plan finance and human resources.

Workday reported revenues of $1.79 billion, up 16.3% year on year, in line with analyst expectations. It was a decent quarter for the company, with EPS and free cash flow estimates exceeding expectations by a wide margin. We also enjoyed seeing Workday lift its full-year revenue and adjusted operating margin guidance, driven by higher expectations for subscription services revenue.

"We're incredibly well positioned going into the second half of our fiscal year as Workday is increasingly seen as the system of trust for enterprises around the world," said Carl Eschenbach, co-CEO, Workday.

Workday Total Revenue

The stock is up 2.39% since the results and currently trades at $230.59.

Is now the time to buy Workday? Read our full report on Workday here.

Best Q2: Flywire (NASDAQ:FLYW)

Originally created to process international tuition payments for universities, Flywire (NASDAQ:FLYW) is a cross border payments processor and software platform focusing on complex, high-value transactions like education, healthcare and B2B payments.

Flywire reported revenues of $84.9 million, up 50.1% year on year, beating analyst expectations by 15.5%. It was an exceptional quarter for the company, with an impressive beat of analysts' revenue estimates and full-year revenue guidance exceeding analysts' expectations.

Flywire Total Revenue

Flywire delivered the fastest revenue growth and highest full year guidance raise among its peers. The stock is down 4.48% since the results and currently trades at $30.73.

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

Weakest Q2: Zuora (NYSE:ZUO)

Founded in 2007, Zuora (NYSE:ZUO) offers software as a service platform that allows companies to bill and accept payments for recurring subscription products.

Zuora reported revenues of $108 million, up 9.39% year on year, missing analyst expectations by 0.69%. It was a weak quarter for the company, with full-year revenue guidance missing analysts' expectations and underwhelming revenue guidance for the next quarter.

Zuora had the weakest performance against analyst estimates and weakest full year guidance update in the group. The stock is down 12.8% since the results and currently trades at $8.44.

Read our full analysis of Zuora's results here.

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 $308.5 million, up 34.7% year on year, beating analyst expectations by 2.29%. It was a mixed quarter for the company, with underwhelming revenue guidance for the next year and a decline in its gross margin. On the other hand, the company beat analysts' revenue expectations this quarter and raised its long-term adjusted EBITDA and free cash flow targets.

The stock is down 16.8% since the results and currently trades at $176.98.

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

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 $140 million, up 26.2% year on year, beating analyst expectations by 2.59%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and full year. Additionally, next quarter's adjusted operating profit guide was also below expectations.

The stock is down 4.02% since the results and currently trades at $21.95.

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

The author has no position in any of the stocks mentioned