The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Paylocity (NASDAQ:PCTY) and the rest of the hr software stocks fared in Q1.
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 satisfactory Q1. As a group, revenues beat analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was 3.6% below.
Thankfully, share prices of the companies have been resilient as they are up 5% on average since the latest earnings results.
Best Q1: Paylocity (NASDAQ:PCTY)
Founded by payroll software veteran Steve Sarowitz in 1997, Paylocity (NASDAQ:PCTY) is a provider of payroll and HR software for small and medium-sized enterprises.
Paylocity reported revenues of $454.5 million, up 13.3% year on year. This print exceeded analysts’ expectations by 2.9%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ EBITDA estimates and full-year EBITDA guidance exceeding analysts’ expectations.
“Our solid results continued into the third quarter of fiscal 25, with recurring revenue growth of 15%, total revenue growth of 13% and increased revenue and profitability guidance for the fiscal year. We continue to see strong channel performance, as referrals, primarily from benefit brokers and financial advisors, once again represented more than 25% of new business for the third quarter, driven by our modern platform, third-party integrations and API capabilities. We remain committed to investing in and supporting the broker channel going forward – with the goal of continuing to deliver real value and true partnership and support to our referring brokers and clients. Additionally, we continue to return capital to shareholders with $150 million or approximately 800,000 shares repurchased through April of this fiscal year,” said Toby Williams, President and Chief Executive Officer of Paylocity.
Paylocity Total Revenue
Paylocity achieved the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 2.1% since reporting and currently trades at $198.40.
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 $530.5 million, up 6.1% year on year, outperforming analysts’ expectations by 0.9%. The business had a very strong quarter with a solid beat of analysts’ EBITDA estimates and full-year EBITDA guidance exceeding analysts’ expectations.
Paycom Total Revenue
The market seems happy with the results as the stock is up 11.8% since reporting. It currently trades at $255.41.
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 $481.8 million, up 11.7% year on year, exceeding analysts’ expectations by 1.1%. Still, it was a slower quarter as it posted revenue guidance for next quarter missing analysts’ expectations significantly and billings in line with analysts’ estimates.
Dayforce delivered the weakest full-year guidance update in the group. Interestingly, the stock is up 1.8% since the results and currently trades at $59.26.
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 $34.85 million, up 10.1% year on year. This print beat analysts’ expectations by 1.7%. More broadly, it was a satisfactory quarter as it also produced an impressive beat of analysts’ EBITDA estimates.
The stock is up 3.8% since reporting and currently trades at $10.14.
One of the oldest service providers in the industry, Paychex (NASDAQ:PAYX) offers its customers payroll and HR software solutions.
Paychex reported revenues of $1.51 billion, up 4.8% year on year. This result was in line with analysts’ expectations. More broadly, it was a mixed quarter as its performance in some other areas of the business was disappointing.
Paychex had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is up 5.5% since reporting and currently trades at $152.
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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