Heading into the next earnings season, it’s time to take stock of this quarter's best and worst performers amongst the HR software stocks in Q2, including Paycom Software (NYSE:PAYC) 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 Q2; on average, revenues beat analyst consensus estimates by 3.51%, while on average next quarter revenue guidance was 2.8% 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 share prices down 0.54% since the previous earnings results, on average.
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 $316.9 million, up 30.8% year on year, beating analyst expectations by 2.7%. It was a decent quarter for the company, with a very optimistic guidance for the next quarter but a decline in gross margin.
“Our very strong second quarter results further illustrate the quality of the fundamentals of our business and the strong demand for our solutions,” said Paycom’s founder and CEO, Chad Richison.
The stock is down 2.69% since the results and currently trades at $329.14.
Is now the time to buy Paycom Software? Access our full analysis of the earnings results here, it's free.
Best Q2: 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 $110.9 million, up 26.1% year on year, beating analyst expectations by 7.26%. It was a very strong quarter for the company, with a full year guidance beating analysts' expectations and a solid beat of analyst estimates.
Paycor achieved the strongest analyst estimates beat among its peers. The stock is down 4.01% since the results and currently trades at $29.68.
Is now the time to buy Paycor? Access our full analysis of the earnings results here, it's free.
Slowest Q2: 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 $20.3 million, up 18.2% year on year, in line with analyst expectations. It was a weaker quarter for the company, with a decline in gross margin and a full year guidance missing analysts' expectations.
Asure Software had the weakest performance against analyst estimates and weakest full year guidance update in the group. The stock is up 1.84% since the results and currently trades at $5.26.
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 $228.9 million, up 36.7% year on year, beating analyst expectations by 5.04%. It was a strong quarter for the company, with very optimistic guidance for the next quarter.
Paylocity delivered the fastest revenue growth and highest full year guidance raise among the peers. The stock is up 1.75% since the results and currently trades at $230.44.
One of the oldest payroll service providers, Paychex provides payroll and human resource (HR) solutions.
Paychex reported revenues of $1.2 billion, up 11.3% year on year, beating analyst expectations by 3.5%. It was a solid quarter for the company, with a significant improvement in gross margin.
Paychex had the slowest revenue growth among the peers. The stock is up 0.5% since the results and currently trades at $113.83.
The author has no position in any of the stocks mentioned