As HR software stocks’ Q4 earnings season wraps, let's dig into this quarter's best and worst performers, 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 strong Q4; on average, revenues beat analyst consensus estimates by 6.6%, while on average next quarter revenue guidance was 5.15% above consensus. Investors abandoned cash burning companies since high interest rates will make it harder to raise capital, but HR software stocks held their ground better than others, with share prices down 0.21% since the previous earnings results, on average.
Weakest Q4: 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 $370.6 million, up 30% year on year, beating analyst expectations by 1.06%. It was a mixed quarter for the company, with strong top line growth but a decline in gross margin.
Paycom Software delivered the weakest performance against analyst estimates and weakest full year guidance update of the whole group. The stock is down 13.4% since the results and currently trades at $298.62.
Is now the time to buy Paycom Software? Access our full analysis of the earnings results here, it's free.
Best Q4: 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 $29.3 million, up 38.7% year on year, beating analyst expectations by 23.3%. It was an impressive quarter for the company, with a significant improvement in gross margin and an solid beat of analyst estimates.
Asure Software pulled off the strongest analyst estimates beat and highest full year guidance raise among its peers. The stock is up 22.4% since the results and currently trades at $13.75.
Is now the time to buy Asure Software? Access our full analysis of the earnings results here, it's free.
Paychex (NASDAQ:PAYX)
One of the oldest payroll service providers, Paychex provides payroll and human resource (HR) solutions.
Paychex reported revenues of $1.38 billion, up 8.23% year on year, beating analyst expectations by 2.4%. It was a solid quarter for the company, with a significant improvement in gross margin.
Paychex had the slowest revenue growth in the group. The stock is up 1.98% since the results and currently trades at $111.1.
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 human resources software for small and medium-sized enterprises.
Paylocity reported revenues of $273 million, up 39.3% year on year, beating analyst expectations by 5.13%. 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 down 14.2% since the results and currently trades at $194.5.
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 $132.9 million, up 28.9% year on year, beating analyst expectations by 4.34%. It was a very strong quarter for the company, with very optimistic guidance for the next quarter.
The stock is up 3.87% since the results and currently trades at $25.5.
Read our full, actionable report on Paycor here, it's free.
The author has no position in any of the stocks mentioned