Looking back on HR software stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Asure (NASDAQ: ASUR) and its peers.
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 mixed Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 1.7% below.
Luckily, HR software stocks have performed well with share prices up 13.2% on average since the latest earnings results.
Weakest Q3: 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 $29.3 million, flat year on year. This print fell short of analysts’ expectations by 6.5%. Overall, it was a disappointing quarter for the company with underwhelming revenue guidance for the next quarter and a miss of analysts’ EBITDA estimates.
Asure Chairman and CEO, Pat Goepel, stated, “Our third quarter performance reflects strong, continued growth, with recurring revenue up 20% year-over-year. We’ve made great strides in transitioning to a more valuable revenue model, with 98% of our revenues now recurring, compared to 81% in the same quarter last year. Additionally, new bookings were up 141% year-over-year. Our backlog has grown significantly — over 35% from Q2 2024 and over 250% from Q3 2023. While large enterprise tax product deals have contributed to our success, their pace of implementation can vary. That said, we remain confident in our ability to maintain this positive trajectory.”
Asure delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 8.2% since reporting and currently trades at $9.12.
Read our full report on Asure here, it’s free.
Best Q3: 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 $167.5 million, up 16.6% year on year, outperforming analysts’ expectations by 3.3%. The business had a strong quarter with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ billings estimates.
Paycor delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 5% since reporting. It currently trades at $17.51.
Is now the time to buy Paycor? Access our full analysis of the earnings results here, it’s free.
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 $440 million, up 16.6% year on year, exceeding analysts’ expectations by 2.7%. Still, it was a slower quarter as it posted a decline in its gross margin and underwhelming EBITDA guidance for the next quarter.
Interestingly, the stock is up 19.1% since the results and currently trades at $77.81.
Read our full analysis of Dayforce’s results here.
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 $1.32 billion, up 2.5% year on year. This print met analysts’ expectations. Overall, it was a satisfactory quarter as it also recorded a decent beat of analysts’ EBITDA estimates.
The stock is up 10.9% since reporting and currently trades at $148.85.
Read our full, actionable report on Paychex here, it’s free.
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 $451.9 million, up 11.2% year on year. This result surpassed analysts’ expectations by 1.1%. It was a strong quarter as it also recorded an impressive beat of analysts’ EBITDA estimates and optimistic EBITDA guidance for the full year.
The stock is up 32.7% since reporting and currently trades at $228.70.
Read our full, actionable report on Paycom here, it’s free.
Market Update
As expected, the Federal Reserve cut its policy rate by 25bps (a quarter of a percent) in November 2024 after Donald Trump triumphed in the US Presidential election. This marks the central bank's second easing of monetary policy after a large 50bps rate cut two months earlier. Going forward, the markets will debate whether these rate cuts (and more potential ones in 2025) are perfect timing to support the economy or a bit too late for a macro that has already cooled too much. Adding to the degree of difficulty is a new Republican administration that could make large changes to corporate taxes and prior efforts such as the Inflation Reduction Act.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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