As we look back at HR software stocks’ third-quarter earnings, we examine this quarter’s best and worst performers, including Asure (NASDAQ:) and its peers.
Modern HR software has two powerful benefits: cost savings and ease of use. To save costs, businesses of all sizes much prefer the flexibility of cloud-based software delivered through a web browser and paid for on a subscription basis, rather than the hassle and complexity of purchasing and managing business software on-premises. In terms of usability, the consumerization of enterprise software creates seamless experiences that merge multiple standalone processes, such as payroll and compliance, into a single, easy-to-use platform.
The six HR software stocks we track reported a mixed third quarter. As a group, revenues were in line with analyst consensus estimates, while revenues for the next quarter were 1.7% below.
Fortunately, HR software stocks have performed well, with share prices up an average of 13.2% since the last earnings results.
Weakest Quarter 3: Asure (NASDAQ:ASUR)
Asure (NASDAQ:ASUR), formed from the merger of two small workforce management companies in 2007, offers cloud-based payroll and HR software for small and medium-sized businesses (SMBs).
Asure reported revenue of $29.3 million, flat year over year. This print fell 6.5% short of analyst expectations. Overall, it was a disappointing quarter for the company, with disappointing revenue expectations for the next quarter and missing analysts’ EBITDA estimates.
Asure Chairman and CEO Pat Goepel said: “Our third quarter performance reflects strong, continued growth, with recurring revenue growth of 20% year-over-year. We’ve made great progress in transitioning to a more valuable revenue model, with 98% of our revenue now recurring, compared to 81% in the same quarter last year. In addition, new bookings increased by 141% year-on-year. Our backlog has grown significantly: over 35% from Q2 2024 and over 250% from Q3 2023. While major corporate tax product deals have contributed to our success, the pace of their implementation may vary. That said, we remain confident in our ability to continue this positive trajectory.”
Asure delivered the weakest performance against analyst estimates, the slowest revenue growth and the weakest full-year forecast update of the entire group. Unsurprisingly, the stock has fallen 8.2% since reporting and is currently trading at $9.12.
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Best Third Quarter: Paycor (NASDAQ:)
Founded 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 revenue of $167.5 million, up 16.6% year over year, and beat analyst expectations by 3.3%. The company had a strong quarter with an impressive return to analyst EBITDA estimates and a solid improvement in analyst billing estimates.
Paycor delivered the highest analyst estimates and the fastest revenue growth among its peers. The market seems pleased with the results, as the stock is up 5% since reporting. It is currently trading at $17.51.
Dayforce (NYSE:NYSE:)
Dayforce (NYSE:DAY), founded in 1992 as Ceridian, an outsourced payroll processor and transformed following the acquisition of Dayforce in 2012, is a provider of cloud-based payroll and HR software aimed at mid-market companies.
Dayforce reported revenue of $440 million, up 16.6% year over year, beating analyst expectations by 2.7%. Still, it was a slower quarter as gross margin declined and EBITDA expectations for the next quarter were disappointing.
Interestingly, the stock is up 19.1% since the results and is currently trading at $77.81.
Paychex (NASDAQ:)
Paychex (NASDAQ:PAYX), one of the oldest service providers in the industry, offers payroll and HR software solutions to its customers.
Paychex reported revenue of $1.32 billion, up 2.5% year over year. This print met analysts’ expectations. Overall, it was a satisfying quarter as it also showed a decent improvement over analysts’ EBITDA estimates.
The stock is up 10.9% since reporting and is currently trading at $148.85.
Paycom (NYSE:NYSE:)
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 revenue of $451.9 million, up 11.2% year over year. This result exceeded analyst expectations by 1.1%. It was a strong quarter as it also showed an impressive performance of analyst EBITDA estimates and optimistic full-year EBITDA expectations.
The stock is up 32.7% since reporting and is currently trading at $228.70.
Market update
As expected, the Federal Reserve cut its policy interest rate by 25 basis points (a quarter of a percent) in November 2024, after Donald Trump triumphed in the US presidential elections. This marks the second easing of monetary policy by the central bank, following a major rate cut of 50 basis points two months earlier. Going forward, markets will debate whether these rate cuts (and more potential rate cuts in 2025) are the perfect time to support the economy or a bit too late for a macro that has already cooled too much. Compounding the difficulty is a new Republican administration that could make major changes to corporate taxes and previous efforts like the Inflation Reduction Act.
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This content was originally published on Stock Story
