As vertical software stocks’ Q1 earnings season wraps, let's dig into this quarters’ best and worst performers, including Adobe (NASDAQ:ADBE) and its peers.
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 11 vertical software stocks we track reported a mixed Q1; on average, revenues beat analyst consensus estimates by 2.53%, while on average next quarter revenue guidance was 2.08% under consensus. The technology sell-off has been putting pressure on stocks since November and while some of the vertical software stocks have fared somewhat better, they have not been spared, with share price declining 11.2% since earnings, on average.
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 $4.38 billion, up 14.3% year on year, in line with analyst expectations. It was a weak quarter for the company, with revenue guidance for both the next quarter and the full year below analysts' estimates.
“Adobe achieved record Q2 revenue with strong demand across Creative Cloud, Document Cloud and Experience Cloud,” said Shantanu Narayen, chairman and CEO, Adobe.
The stock is down 1.38% since the results and currently trades at $360.81.
Is now the time to buy Adobe? Access our full analysis of the earnings results here, it's free.
Best Q1: Toast (NYSE:TOST)
Founded by three MIT engineers at a local Cambridge bar, Toast (NYSE:TOST) provides integrated point of sale (POS) hardware, software, and payments solutions for restaurants.
Toast reported revenues of $535 million, up 52% year on year, beating analyst expectations by 9.07%. It was an incredible quarter for the company, with a significant improvement in gross margin and a very optimistic guidance for the next quarter.
Toast delivered the strongest analyst estimates beat and highest full year guidance raise among its peers. The stock is down 7.99% since the results and currently trades at $13.12.
Is now the time to buy Toast? Access our full analysis of the earnings results here, it's free.
Weakest Q1: Unity (NYSE:U)
Started as a game studio by three friends in a Copenhagen apartment, Unity (NYSE:U) is a software as a service platform that makes it easier to develop and monetize new games and other visual digital experiences.
Unity reported revenues of $320.1 million, up 36.3% year on year, missing analyst expectations by 0.31%. It was a weak quarter for the company, with revenue guidance for both the next quarter and the full year below analysts' estimates.
Unity had the weakest performance against analyst estimates in the group. The company added 31 enterprise customers paying more than $100,000 annually to a total of 1,083. The stock is down 25.8% since the results and currently trades at $35.67.
Founded in 2011 in North Carolina, nCino (NASDAQ:NCNO) makes cloud-based operating systems for banks and provides that software as a service.
nCino reported revenues of $94.2 million, up 51% year on year, beating analyst expectations by 3.05%. It was a solid quarter for the company, with an exceptional revenue growth, and revenue guidance for the next quarter above analysts' estimates.
The stock is down 1.12% since the results and currently trades at $31.57.
Founded in 2010 and named for a combination of “docs” and “proximity”, Doximity (NYSE: DOCS) is the leading professional network for U.S. medical professionals.
Doximity reported revenues of $93.6 million, up 40.4% year on year, beating analyst expectations by 3.86%. It was a weaker quarter for the company, with an underwhelming revenue guidance for the next year and guidance for the next quarter below analysts' estimates.
The stock is up 0.6% since the results and currently trades at $34.
The author has no position in any of the stocks mentioned