Spotting Winners: Dayforce (NYSE:DAY) And HR Software Stocks In Q1

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 Q1, starting with Dayforce (NYSE:DAY).

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 5 HR software stocks we track reported a satisfactory Q1. As a group, revenues beat analysts’ consensus estimates by 1.3% while next quarter’s revenue guidance was 3.6% below.

In light of this news, share prices of the companies have held steady as they are up 4.3% on average since the latest earnings results.

Weakest Q1: 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 $481.8 million, up 11.7% year on year. This print exceeded analysts’ expectations by 1.1%. Despite the top-line beat, it was still a slower quarter for the company with revenue guidance for next quarter missing analysts’ expectations and billings in line with analysts’ estimates.

"We kicked off the year with strong first quarter results and excellent sales momentum,” said David Ossip, Chair and CEO of Dayforce.

Dayforce delivered the weakest full-year guidance update of the whole group. The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $57.70.

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

Best Q1: 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 $454.5 million, up 13.3% year on year, outperforming analysts’ expectations by 2.9%. The business had a very strong quarter with an impressive beat of analysts’ EBITDA estimates.

Paylocity scored the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The market seems content with the results as the stock is up 2.9% since reporting. It currently trades at $200.

Is now the time to buy Paylocity? Access our full analysis of the earnings results 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 $1.51 billion, up 4.8% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted EBITDA in line with analysts’ estimates.

Paychex delivered the weakest performance against analyst estimates and slowest revenue growth in the group. Interestingly, the stock is up 9.1% since the results and currently trades at $157.14.

Read our full analysis of Paychex’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 $530.5 million, up 6.1% year on year. This result topped analysts’ expectations by 0.9%. It was a very strong quarter as it also produced a solid beat of analysts’ EBITDA estimates.

The stock is up 11.9% since reporting and currently trades at $255.68.

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

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 $34.85 million, up 10.1% year on year. This number beat analysts’ expectations by 1.7%. More broadly, it was a satisfactory quarter as it also recorded an impressive beat of analysts’ EBITDA estimates.

The stock is down 1.3% since reporting and currently trades at $9.64.

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

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.