Let’s dig into the relative performance of Asure Software (NASDAQ: ASUR) and its peers as we unravel the now-completed Q2 hr software earnings season.
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 slower Q2. As a group, revenues beat analysts’ consensus estimates by 0.5% while next quarter’s revenue guidance was 2.7% below.
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.
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 $30.12 million, up 7.4% year on year. This print fell short of analysts’ expectations by 3.2%. Overall, it was a softer quarter for the company with EBITDA guidance for next quarter missing analysts’ expectations and a significant miss of analysts’ billings estimates.
“We are pleased to report another solid performance for the second quarter where our revenues of $30.1 million increased 7% from the prior year second quarter and excluding the impact of ERTC, revenue growth was 10%. Our results were driven by continued strong performances coming from our Payroll Tax Management product line and improving attach rates of our HCM products,” said Asure Chairman and CEO Pat Goepel.
Asure Software achieved the highest full-year guidance raise but had the weakest performance against analyst estimates and weakest performance against analyst estimates of the whole group. Still, the market seems discontent with the results. The stock is down 3.6% since reporting and currently trades at $8.10.
Read our full report on Asure Software here, it’s free.
Best Q2: 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 $483.6 million, up 10.5% year on year, outperforming analysts’ expectations by 2.5%. The business had a very strong quarter with a solid beat of analysts’ EBITDA estimates.
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3.6% since reporting. It currently trades at $214.85.
Is now the time to buy Paycom? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: 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 $1.43 billion, up 10.2% year on year, falling short of analysts’ expectations by 1.1%. It was a disappointing quarter as it posted a miss of analysts’ EBITDA estimates.
As expected, the stock is down 15.3% since the results and currently trades at $129.
Read our full analysis of Paychex’s results here.
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 $464.7 million, up 9.8% year on year. This number beat analysts’ expectations by 1.5%. Taking a step back, it was a slower quarter as it logged revenue guidance for next quarter missing analysts’ expectations.
Dayforce had the weakest full-year guidance update among its peers. The stock is up 29.8% since reporting and currently trades at $68.85.
Read our full, actionable report on Dayforce here, it’s free.
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 $400.7 million, up 12.2% year on year. This print topped analysts’ expectations by 3.1%. Taking a step back, it was a satisfactory quarter as it also recorded an impressive beat of analysts’ EBITDA estimates but full-year guidance of slowing revenue growth.
Paylocity scored the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is down 9.8% since reporting and currently trades at $163.81.
Read our full, actionable report on Paylocity here, it’s free.
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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