Systems of Action in HR Tech
A quarterly review of public market trends in HR Tech, with public market data as of 8/21/2025. Follow along to stay up to date!
Systems of Record & Systems of Action
I want to highlight 2 acquisitions that were announced in late August:
Workday acquired AI recruiting platform Paradox for $1B (press release)
Thoma Bravo acquired HCM platform Dayforce for $12B (press release)
Josh Bersin covered the Paradox acquisition well and perfectly described what makes them so special: “At McDonald's, you can stand in line to get a burger, then apply for and accept a job before your burger is even ready”. Leveraging conversational AI, Paradox simplifies and automates every step of the application process. As an investor in Paradox*, I won’t comment on company-specific details. Still, congrats to Aaron, Adam, and the rest of the team!
Paradox’s success illustrates a broader shift underway in enterprise software: A rise in systems of action (SOA) that sit on top of legacy systems of record (SOR). Systems of action don’t just store data; they build powerful workflows that automate routine tasks and enable faster, more informed decisions.
While the first wave of cloud created value by digitizing records, the next wave will create value by automating actions. Historically, point solutions sat on top of SORs as narrow add-ons; with GenAI, they have the agency to gather, interpret, and act on data directly. Candidate outreach, application review, AI interviews, and recruiter copilots have all become flagship features of venture-backed startups. As these automations become more sophisticated, I expect the value in enterprise software to shift from systems of record to systems of action, with some healthy consolidation along the way.
The recent acquisitions by Workday and Thoma Bravo are not isolated events, as incumbent SORs will have to buy or build core automations to maintain relevance. Workday’s purchase of Paradox signals a decision to buy a workflow layer they likely couldn’t build fast enough. Thoma Bravo’s buyout of Dayforce is likely the beginning of a next-gen HR Tech roll up. I wouldn’t be surprised to see them make 2-3 bolt-on acquisitions over the next few years.
Shifting from buyers to builders, companies like Ashby* and Rippling saw this SOA trend years ago and chose to build fully integrated systems of record and action. Deel, Remote, Lattice, and Gem all started as systems of action before building their own HRIS/ATS platforms, competing directly with the systems of record they sit on top of.
Consolidation is likely to continue, but the real question is whether integrated challengers can replace incumbents before they finish buying their way in. The outcome won’t just determine the winners in HR Tech; if incumbents stumble, challengers will set the template for how enterprise software evolves in the AI era.
On to the regular earnings highlights!
Human Capital Management (HCM)
Continued demand for AI and platform consolidation: Another strong quarter for HCM platforms, with all companies attributing growth to tech stack consolidation and AI investments. Dayforce’s CEO David Ossip cited that Dayforce replaces 12 systems on average. While each company isn’t going into detail as to what “full suite” includes or doesn’t include, they all highlight these as the norm. Every company also reaffirmed their full year guidance, with Workday slightly raising revenue and operating income guidance.
Market uncertainty starting to show: SAP and Workday both noted headwinds in government and education verticals, with SAP calling out longer sales cycles and extended approval workflows. SAP also saw growth in their cloud backlog decelerate.
Payroll
Mixed macro signals: While Paylocity and Paycom described demand as healthy and stable, ADP noted a softer finish in HR outsourcing and called out delayed decision making due to macro concerns. The segment targets upper mid-market and enterprise clients, signaling a possible slowdown in enterprise hiring. Both Paylocity and ADP are predicting net hires to be flat across their overall customer base in 2026. Despite this, ADP and paylocity are continuing to invest in sales headcount.
Inorganic growth: Over half of Paylocity’s growth was driven from product upsells, with ACVs growing 8% YoY to $35K. Paylocity recently acquired Airbase, a mid-market spend management platform that had raised $90M in venture funding. ADP also attributed some of their growth to Workforce, a workforce management platform they purchased from private equity last year.
Online Employment marketplace (OEM)
Slow growth driven by macro uncertainty: All companies called out low hiring numbers from SMBs. Recruit Holdings (owners of Indeed & Glassdoor) called out a particular weakness in March and April among SMBs but also highlighted resilience in healthcare & construction. Upwork is supposedly seeing strong growth in its Business Plus offering despite overall revenue growth being flat YoY. Upwork raised their 2026 guidance but is still projecting <10% annual growth.
AI driving more margin than growth: While multiple companies are citing large growth numbers in AI products and usage, few are seeing an acceleration in revenue growth. However, Fiverr and Upwork have recognized higher margins from successfully deployed AI investments across their own business. They both deployed customer service agents, with Upwork noting 80% adoption of its “Upwork assist” agent. Upwork also rolled out AI agents for forecasting financial performance and analyzing employee feedback.
Talent Management
Growth acceleration driven by AI upskilling: After ~5 straight quarters of decelerating growth, Docebo, Coursera and Udemy all saw a reacceleration this quarter. Udemy, after moving upmarket, has seen an increase in win rates and an increasing pipeline, with growth being slightly dragged down by a roll off of smaller customers. They also saw their highest net retention in Japan in 3 years. All companies cited AI upskilling as growth drivers.
Docebo moves downmarket: Docebo, the least scaled but fastest growing talent management platform, hasn’t seen the same success as Udemy in the enterprise space. They recently pivoted their sales process to a mid-market land & expand motion (as opposed to pushing for full-suite deals upfront).
Other Charts and Graphs
The below chart shows the EV / NTM revenue multiple divided by NTM consensus growth expectations. So a company trading at 10x NTM revenue that is projected to grow 25% would be trading at a 0.4x growth-adjusted revenue multiple. The goal of this graph is to show how relatively cheap / expensive a stock is relative to its growth expectations.
If you’re an operator or investor in the space, I’d love to hear from you. Please reach out at kgetsiv@indeed.com
Thanks for reading!
Footnotes & Disclosures:
*Indeed is an investor through their HR Tech Investments affiliate
**Paychex’s acquisition of Paycor is driving their 20% forward growth projections
***Announced intention to be acquired by Thoma Bravo
The information presented in this publication is for informational purposes only and should not be construed as investment advice or a recommendation to buy or sell any security. The views expressed are solely those of the author and do not represent the views of any company, employer, or affiliated party.
All data and analysis are derived from public sources, including Pitchbook and company websites. No confidential or proprietary information has been used or referenced. While the information is believed to be accurate and from reliable sources, no warranty is made as to its completeness or accuracy, and no liability is accepted for errors or omissions. Past performance is not indicative of future results.