Reflecting On HR Software Stocks’ Q2 Earnings: Paycom (NYSE:PAYC)

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 Q2, 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 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.

Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility. However, HR software stocks have held steady amidst all this with share prices up 2.4% on average since the latest earnings results.

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. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with a decline in its gross margin and full-year revenue guidance missing analysts’ expectations.

“During the second quarter, our outside sales team delivered solid performance with robust new logo adds, as we continue to sell the most automated solution on the market,” said Paycom founder, CEO and chairman, Chad Richison.

Interestingly, the stock is up 1.1% since reporting and currently trades at $168.49.

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

Best Q2: 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 $1.30 billion, up 5.3% year on year, in line with analysts’ expectations. The business performed better than its peers, but it was unfortunately a slower quarter with a decline in its gross margin.

The market seems happy with the results as the stock is up 6.6% since reporting. It currently trades at $133.18.

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

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, exceeding analysts’ expectations by 2.1%. Still, it was a softer quarter with management forecasting growth to slow. In addition, revenue guidance for the next quarter was underwhelming.

Paylocity delivered the weakest full-year guidance update in the group. Interestingly, the stock is up 6.3% since the results and currently trades at $157.62.

Read our full analysis of Paylocity’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 $423.3 million, up 15.7% year on year. This print beat analysts’ expectations by 1.4%. More broadly, it was a slower quarter as it logged a decline in its gross margin. In addition, customer growth decelerated.

Dayforce achieved 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 7.8% since reporting and currently trades at $57.90.

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

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 number beat analysts’ expectations by 2.3%. Taking a step back, it was a slower quarter for the company with management forecasting growth to slow and a decline in its gross margin.

Paycor pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 6.9% since reporting and currently trades at $13.52.

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

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