HR Software Stocks Q3 Results: Benchmarking Paychex (NASDAQ:PAYX)

November 14, 2024 at 05:27 AM EST

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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 Paychex (NASDAQ: PAYX).

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 12.8% on average since the latest earnings results.

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 was in line with analysts’ expectations, and overall, it was a satisfactory quarter for the company with a decent beat of analysts’ EBITDA estimates.

President and Chief Executive Officer , John Gibson commented, "We are off to a solid start in fiscal 2025 with 3% growth in total revenue during the first quarter. Excluding the impact of the expiration of the Employee Retention Tax Credit ("ERTC") program and one less payroll processing day, revenue growth was 7%.

Interestingly, the stock is up 10% since reporting and currently trades at $147.61.

Is now the time to buy Paychex? Access our full analysis of the earnings results 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 pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 5.6% since reporting. It currently trades at $17.60.

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

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, falling short of analysts’ expectations by 6.5%. It was a disappointing quarter as it posted revenue guidance for next quarter missing analysts’ expectations significantly and a significant miss of analysts’ EBITDA estimates.

Asure delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. As expected, the stock is down 8.1% since the results and currently trades at $9.13.

Read our full analysis of Asure’s results here.

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. This number surpassed analysts’ expectations by 2.7%. Zooming out, it was a mixed quarter as it also logged an impressive beat of analysts’ EBITDA estimates but EBITDA guidance for next quarter missing analysts’ expectations.

The stock is up 20.2% since reporting and currently trades at $78.51.

Read our full, actionable report on Dayforce 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 print beat analysts’ expectations by 1.1%. Overall, it was a strong quarter as it also recorded a solid beat of analysts’ EBITDA estimates and full-year EBITDA guidance exceeding analysts’ expectations.

The stock is up 32% since reporting and currently trades at $227.50.

Read our full, actionable report on Paycom here, it’s free.

Market Update

Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.

Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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