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Spotting Winners: Adobe (NASDAQ:ADBE) And Vertical Software Stocks In Q2


Kayode Omotosho /
2021/10/20 6:27 am EDT
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With Q3 on the horizon, here's a look back at some of the most exciting (and some less so) results from Q2. Today we are looking at the vertical software stocks, starting with Adobe (NASDAQ:ADBE).

Software is eating the world, and while a large number of solutions such as project management or video conferencing software can be useful to a wide array of industries, there are industries that have very specific needs. Whether it is life-sciences, education or banking, the demand for so called vertical software, addressing industry specific workflows, is growing, fueled by the pressures on improving productivity and quality of offerings.

The 8 vertical software stocks we track reported a solid Q2; on average, revenues beat analyst consensus estimates by 5.6%, while on average next quarter revenue guidance was 5.5% above consensus. The market rewarded the results with the average return the day after earnings coming in at 3.07%.

Adobe (NASDAQ:ADBE)

One of the most well-known Silicon Valley software companies around, Adobe (NASDAQ:ADBE) is a leading provider of software as service in the digital design and document management space.

Adobe reported revenues of $3.93 billion, up 22% year on year, in line with analyst expectations. It was a solid quarter for the company with a reaccelerating growth.

“Adobe had another outstanding quarter as Creative Cloud, Document Cloud and Experience Cloud continue to transform storytelling, learning and conducting business in a digital-first world,” said Shantanu Narayen, president and CEO, Adobe.

Adobe Total Revenue

Adobe scored the highest full year guidance raise of the whole group. The stock is down 1.18% since the results and currently trades at $638.22.

We think Adobe is a good business, but is it a buy today? Read our full report here, it's free.

Best Q2: Upstart (NASDAQ:UPST)

Founded by the former head of Google's enterprise business Dave Girouard, Upstart (NASDAQ:UPST) is an AI-powered lending platform that helps banks better evaluate the risk of lending money to a person and provide loans to more customers.

Upstart reported revenues of $193.9 million, up 10x year on year, beating analyst expectations by 22.9%. It was a very strong quarter for the company, with an impressive beat of analyst estimates and an exceptional revenue growth.

Upstart Total Revenue

Upstart achieved the strongest analyst estimates beat and fastest revenue growth among its peers. The stock is up 166% since the results and currently trades at $361.60.

Is now the time to buy Upstart? Access our full analysis of the earnings results here, it's free.

Weakest Q2: 2U (NASDAQ:TWOU)

Originally named 2tor after the founder's dog Tor, 2U (NASDAQ:TWOU) provides software for universities and colleges to deliver online degree programs and courses.

2U reported revenues of $237.2 million, up 29.8% year on year, beating analyst expectations by 1.54%. It was a weaker quarter for the company, with a strong top line growth but a full year guidance missing analysts' expectations.

2U had the weakest full year guidance update in the group. The stock is down 26.3% since the results and currently trades at $33.90.

Read our full analysis of 2U's results here.

Autodesk (NASDAQ:ADSK)

Founded in 1982 by John Walker and growing into one of the industry's behemoths, Autodesk (NASDAQ:ADSK) makes computer-aided design (CAD) software for engineering, construction, and architecture companies.

Autodesk reported revenues of $1.05 billion, up 16% year on year. It was a decent quarter for the company, with revenue narrowly beating analyst estimates.

Autodesk had the weakest performance against analyst estimates and slowest revenue growth among the peers. The stock is down 13.2% since the results and currently trades at $296.69.

Read our full, actionable report on Autodesk here, it's free.

The author has no position in any of the stocks mentioned