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 Q3, starting with Paylocity (NASDAQ:PCTY).
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 mixed Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 1.7% below.
Luckily, HR software stocks have performed well with share prices up 15.5% on average since the latest earnings results.
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 $363 million, up 14.3% year on year. This print exceeded analysts’ expectations by 1.9%. Overall, it was a strong quarter for the company with a solid beat of analysts’ EBITDA estimates and revenue guidance for next quarter topping analysts’ expectations.
“Fiscal 25 is off to a strong start, with recurring & other revenue and total revenue growth of 14% in the first quarter, combined with a significant year-over-year increase in profitability, as our differentiated value proposition of providing the most modern software in the industry continues to resonate in the marketplace.” said Toby Williams, President and Chief Executive Officer of Paylocity.
Paylocity achieved the highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 18.7% since reporting and currently trades at $211.88.
Is now the time to buy Paylocity? Access our full analysis of the earnings results here, it’s free.
Best Q3: 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 $167.5 million, up 16.6% year on year, outperforming analysts’ expectations by 3.3%. The business had a strong quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ billings estimates.
Paycor delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 5.9% since reporting. It currently trades at $17.66.
Is now the time to buy Paycor? Access our full analysis of the earnings results here, it’s free.
Weakest Q3: 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 $29.3 million, flat year on year, falling short of analysts’ expectations by 6.5%. It was a disappointing quarter as it posted revenue guidance for next quarter missing analysts’ expectations.
Asure delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. As expected, the stock is down 2.8% since the results and currently trades at $9.65.
Read our full analysis of Asure’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 $451.9 million, up 11.2% year on year. This result beat analysts’ expectations by 1.1%. Overall, it was a strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates.
The stock is up 37.4% since reporting and currently trades at $236.79.
Read our full, actionable report on Paycom here, it’s free.
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 $1.32 billion, up 2.5% year on year. This print met analysts’ expectations. Overall, it was a satisfactory quarter as it also put up a decent beat of analysts’ EBITDA estimates.
The stock is up 8.9% since reporting and currently trades at $146.07.
Read our full, actionable report on Paychex here, it’s free.
Market Update
In response to the Fed's rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed's 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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