The end of an earnings season can be a great time to assess how companies are handling the current business environment and discover new stocks. Let’s have a look at how Ceridian (NYSE:CDAY) and the rest of the HR software stocks fared in Q1.
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 3.75%, while on average next quarter revenue guidance was 1.39% above consensus. Increasing interest rates hurt growth companies as investors search for near-term cash flows, but HR software stocks held their ground better than others, with the share prices up 2.33% since the previous earnings results, on average.
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.
“I am very pleased with our performance in the first quarter – as Dayforce recurring revenue grew 44% or 46% on a constant currency basis and we exceeded our profitability objectives,” said David Ossip, Chair and Co-CEO of Ceridian.
Ceridian delivered the weakest full year guidance update of the whole group. The company added 186,000 customers to a total of 6,179,000. The stock is up 6.88% since the results and currently trades at $66.97.
Read our full report on Ceridian 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 delivered the strongest analyst estimates beat and highest full year guidance raise among its peers. The stock is down 9.52% since the results and currently trades at $12.16.
Is now the time to buy Asure Software? Access our full analysis of the earnings results here, it's free.
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 $451.6 million, up 27.8% year on year, beating analyst expectations by 1.72%. It was a mixed quarter for the company, with strong top line growth but a decline in gross margin.
The stock is up 11.2% since the results and currently trades at $321.24.
Read our full analysis of Paycom Software'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 $339.9 million, up 38.2% year on year, beating analyst expectations by 2.03%. It was a very strong quarter for the company, with very optimistic guidance for the next quarter.
Paylocity pulled off the fastest revenue growth among the peers. The stock is up 0.47% since the results and currently trades at $184.53.
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 $161.5 million, up 31.7% year on year, beating analyst expectations by 3.45%. It was a very strong quarter for the company, with very optimistic guidance for the next quarter.
The stock is up 3.95% since the results and currently trades at $23.67.
Read our full, actionable report on Paycor here, it's free.
The author has no position in any of the stocks mentioned