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HR Software Stocks Q1 Teardown: Paycom (NYSE:PAYC) Vs The Rest


Max Juang /
2024/06/19 6:16 am EDT

The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how hr software stocks fared in Q1, starting with Paycom (NYSE:PAYC).

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 slower Q1; on average, revenues beat analyst consensus estimates by 0.7%. while next quarter's revenue guidance was 0.5% below consensus. Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. The start of 2024 has been a different story as mixed signals have led to market volatility, and HR software stocks have had a rough stretch, with share prices down 14.4% on average since the previous earnings results.

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 $499.9 million, up 10.7% year on year, in line with analysts' expectations. It was a slower quarter for the company, with a decline in its gross margin.

“Led by Beti and our differentiated product strategy, we continue to deliver value to businesses that leverage HCM automation, while simplifying the lives of employees and HR teams across the globe,” said Paycom's founder, Co-CEO, President and Chairman, Chad Richison.

Paycom Total Revenue

The stock is down 23.3% since the results and currently trades at $142.88.

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

Best Q1: Dayforce (NYSE:DAY)

Founded in 1992 as Ceridian, an outsourced payroll processor and transformed after the 2012 acquisition of Dayforce, Dayforce (NYSE:DAY) is a provider of cloud based payroll and HR software targeted at mid-sized businesses.

Dayforce reported revenues of $431.5 million, up 16.4% year on year, outperforming analysts' expectations by 1.3%. It was a solid quarter for the company, with accelerating customer growth and a significant improvement in its gross margin.

Dayforce Total Revenue

The stock is down 19.9% since the results and currently trades at $49.16.

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

Weakest Q1: 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 $1.44 billion, up 4.2% year on year, falling short of analysts' expectations by 1.2%. It was a weak quarter for the company: Revenue unfortunately missed analysts' expectations, although EPS beat. With regards to the full year, revenue guidance missed expectations.

Paychex had the weakest performance against analyst estimates in the group. The stock is up 3.3% since the results and currently trades at $125.59.

Read our full analysis of Paychex's results here.

Paylocity (NASDAQ:PCTY)

Founded by payroll software veteran Steve Sarowitz in 1997, Paylocity (NASDAQ:PCTY) is a provider of payroll and HR software for small and medium-sized enterprises.

Paylocity reported revenues of $401.3 million, up 18.1% year on year, surpassing analysts' expectations by 1%. It was a solid quarter for the company, with a significant improvement in its gross margin and strong sales guidance for the next quarter.

Paylocity pulled off the fastest revenue growth among its peers. The stock is down 10.4% since the results and currently trades at $133.91.

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

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 $31.65 million, down 4.3% year on year, surpassing analysts' expectations by 2%. It was a slower quarter for the company, with a miss of analysts' billings estimates.

Asure delivered the biggest analyst estimates beat and highest full-year guidance raise, but had the slowest revenue growth among its peers. The stock is down 0.6% since the results and currently trades at $7.89.

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

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