Winners And Losers Of Q2: Dayforce (NYSE:DAY) Vs The Rest Of The HR Software Stocks
Let’s dig into the relative performance of Dayforce (NYSE:DAY) 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 6 HR software stocks we track reported a weak Q2. As a group, revenues beat analysts’ consensus estimates by 0.7% while next quarter’s revenue guidance was 2.1% below.
Inflation progressed towards the Fed’s 2% goal at the end of 2023, leading to strong stock market performance. On the other hand, 2024 has been a bumpier ride as the market switches between optimism and pessimism around rate cuts and inflation. However, HR software stocks have held steady amidst all this with share prices up 3.6% on average since the latest earnings results.
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 exceeded analysts’ expectations by 1.4%. Despite the top-line beat, it was still a weaker quarter for the company with a decline in its gross margin and decelerating customer growth.
“Our business momentum continued in the second quarter of 2024, with Dayforce recurring revenue up 20%, and year-to-date cash flows from operating activities up 16%. Our success is rooted in the simplicity that organizations around the world are seeing with the Dayforce platform, enabling them to create significant efficiencies in their businesses while delivering a best-in-class HCM experience for their employees,” said David Ossip, Chair and CEO of Dayforce.
Dayforce scored the highest full-year guidance raise of the whole group. The company added 82 customers to reach a total of 6,657. Unsurprisingly, the stock is up 9.9% since reporting and currently trades at $59.
Read our full report on Dayforce 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. It performed better than its peers, but it was unfortunately a slower quarter for the company with a decline in its gross margin.
The market seems content with the results as the stock is up 3.7% since reporting. It currently trades at $129.54.
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%. It was a weak quarter for the company with management forecasting growth to slow and underwhelming revenue guidance for the next quarter.
Paylocity had the weakest full-year guidance update in the group. Interestingly, the stock is up 8.6% since the results and currently trades at $161.
Read our full analysis of Paylocity’s results here.
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. It was a slower quarter for the company with a decline in its gross margin and full-year revenue guidance missing analysts’ expectations.
The stock is down 2.1% since reporting and currently trades at $163.23.
Read our full, actionable report on Paycom 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, surpassing analysts’ expectations by 2.3%. Taking a step back, it was a weak 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 12.8% since reporting and currently trades at $14.28.
Read our full, actionable report on Paycor here, it’s free.
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