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 Q3, 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 5 hr software stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 0.7% while next quarter’s revenue guidance was in line.
While some hr software stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.1% since the latest earnings results.
Paycom (NYSE: PAYC)
Pioneering the concept of employees doing their own payroll with its "Beti" technology, Paycom (NYSE: PAYC) provides cloud-based human capital management software that helps businesses manage the entire employment lifecycle from recruitment to retirement.
Paycom reported revenues of $493.3 million, up 9.2% year on year. This print was in line with analysts’ expectations, but overall, it was a mixed quarter for the company with a narrow beat of analysts’ EBITDA estimates but billings in line with analysts’ estimates.
Paycom achieved the highest full-year guidance raise but had the slowest revenue growth of the whole group. Still, the market seems discontent with the results. The stock is down 6.2% since reporting and currently trades at $166.08.
Is now the time to buy Paycom? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: Paylocity (NASDAQ: PCTY)
Operating in a field where companies traditionally juggled multiple disconnected systems, Paylocity (NASDAQ: PCTY) provides cloud-based human capital management and payroll software solutions that help businesses manage their workforce and HR processes.
Paylocity reported revenues of $408.2 million, up 12.5% year on year, outperforming analysts’ expectations by 1.9%. The business had a strong quarter with a solid beat of analysts’ EBITDA estimates and full-year EBITDA guidance slightly topping analysts’ expectations.
Paylocity delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 6.2% since reporting. It currently trades at $148.19.
Is now the time to buy Paylocity? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Dayforce (NYSE: DAY)
Rebranded from Ceridian in January 2024 to highlight its flagship product, Dayforce (NYSE: DAY) provides cloud-based software that helps organizations manage their entire employee lifecycle, including HR, payroll, workforce management, benefits, and talent development.
Dayforce reported revenues of $481.6 million, up 9.5% year on year, in line with analysts’ expectations. It was a slower quarter as it posted a miss of analysts’ billings estimates.
Dayforce delivered the weakest performance against analyst estimates in the group. The stock is flat since the results and currently trades at $68.98.
Read our full analysis of Dayforce’s results here.
Asure Software (NASDAQ: ASUR)
Operating in the often-overlooked smaller metropolitan markets where HR expertise can be scarce, Asure Software (NASDAQ: ASUR) provides cloud-based human capital management software and services that help small and medium-sized businesses manage payroll, taxes, time tracking, and HR compliance.
Asure Software reported revenues of $36.25 million, up 23.7% year on year. This result beat analysts’ expectations by 1.6%. More broadly, it was a satisfactory quarter as it also produced an impressive beat of analysts’ billings estimates but full-year revenue guidance missing analysts’ expectations significantly.
Asure Software delivered the fastest revenue growth but had the weakest full-year guidance update among its peers. The stock is flat since reporting and currently trades at $8.14.
Read our full, actionable report on Asure Software here, it’s free for active Edge members.
Paychex (NASDAQ: PAYX)
Once known as the go-to service for small business payroll needs, Paychex (NASDAQ: PAYX) provides payroll processing, HR services, employee benefits administration, and insurance solutions to small and medium-sized businesses.
Paychex reported revenues of $1.54 billion, up 16.8% year on year. This number met analysts’ expectations. Zooming out, it was a slower quarter as it recorded a slight miss of analysts’ EBITDA estimates.
The stock is down 13% since reporting and currently trades at $111.78.
Read our full, actionable report on Paychex here, it’s free for active Edge members.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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