A Look Back at HR Software Stocks’ Q2 Earnings: Paycor (NASDAQ:PYCR) Vs The Rest Of The Pack
Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at Paycor (NASDAQ:PYCR) 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 slower Q2. As a group, revenues beat analysts’ consensus estimates by 0.7% while next quarter’s revenue guidance was 2.1% below.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
Thankfully, HR software stocks have been resilient with share prices up 8.3% on average since the latest earnings results.
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 $164.8 million, up 17.7% year on year. This print exceeded analysts’ expectations by 2.3%. Despite the top-line beat, it was still a weaker quarter for the company with management forecasting growth to slow and a decline in its gross margin.
“Paycor delivered revenue growth of 18% for the quarter and 19% for the year, propelled by strong execution against our strategic growth initiatives to add employees and expand PEPM,” said Raul Villar, Jr., Chief Executive Officer of Paycor.
Paycor pulled off the biggest analyst estimates beat and fastest revenue growth of the whole group. Unsurprisingly, the stock is up 8.4% since reporting and currently trades at $13.71.
Read our full report on Paycor here, it’s free.
Best Q2: 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 $437.5 million, up 9.1% year on year, in line with analysts’ expectations. The business performed better than its peers, but it was unfortunately a mixed quarter with a solid beat of analysts’ EBITDA estimates but a decline in its gross margin.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $167.20.
Is now the time to buy Paycom? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: 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 $28.04 million, down 7.8% year on year, falling short of analysts’ expectations by 2%. It was a softer quarter as it posted a miss of analysts’ EBITDA estimates and a decline in its gross margin.
Asure delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 3.9% since the results and currently trades at $9.60.
Read our full analysis of Asure’s results here.
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 $357.3 million, up 15.8% year on year. This print surpassed analysts’ expectations by 2.1%. Taking a step back, it was a slower quarter as it recorded underwhelming revenue guidance for the next quarter.
Paylocity had the weakest full-year guidance update among its peers. The stock is up 18.2% since reporting and currently trades at $175.21.
Read our full, actionable report on Paylocity 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 $423.3 million, up 15.7% year on year. This number surpassed analysts’ expectations by 1.4%. Taking a step back, it was a slower quarter as it logged a decline in its gross margin and decelerating customer growth.
Dayforce delivered the highest full-year guidance raise among its peers. The company added 82 customers to reach a total of 6,657. The stock is up 21.2% since reporting and currently trades at $65.06.
Read our full, actionable report on Dayforce here, it’s free.
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