As the craze of earnings season draws to a close, here's a look back at some of the most exciting (and some less so) results from Q3. Today we are looking at the HR software stocks, starting with Ceridian (NYSE:CDAY).
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 weak Q3; on average, revenues beat analyst consensus estimates by 2.5% while next quarter's revenue guidance was 3.5% below consensus. Inflation (despite slowing) has investors prioritizing near-term cash flows, but HR software stocks held their ground better than others, with share prices down 3.3% on average since the previous earnings results.
Best Q3: 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 $377.5 million, up 19.6% year on year, topping analyst expectations by 2.2%. It was a mixed quarter for the company, with strong sales guidance for the next quarter but decelerating customer growth.
“Ceridian delivered another strong quarter, underpinned by Dayforce recurring revenue growth of 34.6%,” said David Ossip, Chair and Co-CEO of Ceridian.
Ceridian scored the highest full-year guidance raise of the whole group. The company added 74,000 customers to reach a total of 6.35 million. The stock is up 1.5% since the results and currently trades at $64.96.
Is now the time to buy Ceridian? Access our full analysis of the earnings results here, it's free.
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 $1.26 billion, up 5.7% year on year, falling short of analyst expectations by 0.7%. It was a weak quarter for the company, with a miss of analysts' revenue estimates and a decline in its gross margin.
Paychex had the slowest revenue growth among its peers. The stock is down 6.4% since the results and currently trades at $119.7.
Is now the time to buy Paychex? Access our full analysis of the earnings results here, it's free.
Weakest Q3: 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 $406.3 million, up 21.6% year on year, falling short of analyst expectations by 1.2%. It was a weak quarter for the company, with full-year revenue and adjusted EBITDA guidance below estimates.
Paycom had the weakest performance against analyst estimates and weakest full-year guidance update in the group. The stock is down 20.5% since the results and currently trades at $194.74.
Read our full analysis of Paycom's results here.
Asure (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 reported revenues of $29.33 million, up 33.9% year on year, surpassing analyst expectations by 11.1%. It was a mixed quarter for the company, with underwhelming revenue guidance for the next quarter. On the other hand, revenue and EPS exceeded expectations this quarter.
Asure achieved the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is down 5% since the results and currently trades at $8.13.
Read our full, actionable report on Asure 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 $143.6 million, up 21.4% year on year, surpassing analyst expectations by 2.9%. It was a mixed quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its gross margin. On the other hand, revenue beat analysts' expectations this quarter
The stock is up 9.6% since the results and currently trades at $19.57.
Read our full, actionable report on Paycor here, it's free.
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The author has no position in any of the stocks mentioned