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Vertical Software Stocks Q2 Results: Benchmarking Autodesk (NASDAQ:ADSK)


Adam Hejl /
2022/09/21 3:08 am EDT
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As vertical software stocks’ Q2 earnings season wraps, let's dig into this quarter’s best and worst performers, including Autodesk (NASDAQ:ADSK) 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 weaker Q2; on average, revenues missed analyst consensus estimates by 0.01%, while on average next quarter revenue guidance was 4.51% under consensus. Investors abandoned cash burning companies since high interest rates will make it harder to raise capital and vertical software stocks have not been spared, with share price down 18.4% since the previous earnings results, on average.

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 $1.23 billion, up 16.7% year on year, in line with analyst expectations. It was a mixed quarter for the company, with an optimistic revenue guidance for the next quarter but a slow revenue growth.

"We are moving from products to platforms and capabilities, and bringing those capabilities to any device, anywhere, through the cloud," said Andrew Anagnost, Autodesk president and CEO.

Autodesk Total Revenue

The stock is down 8.99% since the results and currently trades at $194.97.

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

Best Q2: 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 $675 million, up 58.9% year on year, beating analyst expectations by 4.22%. It was an impressive quarter for the company, with a very optimistic guidance for the next quarter and an exceptional revenue growth.

Toast Total Revenue

Toast delivered the strongest analyst estimates beat, fastest revenue growth, and highest full year guidance raise among its peers. The stock is up 2.75% since the results and currently trades at $18.63.

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

Slowest Q2: 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 $297 million, up 8.58% year on year, missing analyst expectations by 0.67%. It was a weak quarter for the company, with guidance for both the next quarter and full year missing analysts' expectations. Unity previously announced that it has entered into an agreement to merge with ironSource.

The stock is down 29.7% since the results and currently trades at $35.20.

Read our full analysis of Unity's results here.

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 $241.4 million, up 1.79% year on year, missing analyst expectations by 5.03%. It was a weak quarter for the company, with full year guidance missing analysts' expectations and a miss of the top line analyst estimates.

2U had the weakest performance against analyst estimates, slowest revenue growth, and weakest full year guidance update among the peers. The stock is down 35% since the results and currently trades at $6.72.

Read our full, actionable report on 2U here, it's free.

Q2 Holdings (NYSE:QTWO)

Founded in 2004 by Hank Seale, Q2 (NYSE:QTWO) offers software as a service that enables small banks provide online banking and consumer lending services to their clients.

Q2 Holdings reported revenues of $140.3 million, up 13.5% year on year, in line with analyst expectations. It was a weaker quarter for the company, with an underwhelming revenue guidance for the next quarter and a slow revenue growth.

The stock is down 23.6% since the results and currently trades at $36.72.

Read our full, actionable report on Q2 Holdings here, it's free.

The author has no position in any of the stocks mentioned