As we reflect back on the just completed Q2 design software sector earnings season, we dig into the relative performance of Matterport (NASDAQ:MTTR) and its peers.
The demand for rich, interactive 2D, 3D, VR and AR experiences is growing, and while the ubiquitous metaverse might still be more of a buzzword than a real thing, what is real is the demand for the tools to create these experiences, whether they are games, 3D tours or interactive movies.
The 8 design software stocks we track reported a slower Q2; on average, revenues beat analyst consensus estimates by 2.02%, while on average next quarter revenue guidance was 2.87% under consensus. There has been a stampede out of high valuation technology stocks as raising interest rates encourage investors to value profits over growth again, but design software stocks held their ground better than others, with share prices down 4.76% since the previous earnings results, on average.
Weakest Q2: Matterport (NASDAQ:MTTR)
Founded in 2011 before any mass market VR headset was released, Matterport (NASDAQ:MTTR) provides the hardware and software necessary to turn real world spaces into 3D visualization.
Matterport reported revenues of $39.6 million, up 38.9% year on year, in line with analyst expectations. It was a weak quarter for the company, with revenue guidance for the next quarter and full-year missing analysts' expectations.
“The second quarter execution was pivotal for the company this year. We delivered record subscription and services revenue while doubling-down on our efficiency initiatives to deliver step function productivity gains in the second half of 2023. Total revenue for the quarter grew to nearly $40 million, fueled by strong enterprise adoption and steady improvements with our small and medium-sized businesses,” said RJ Pittman, Chairman and Chief Executive Officer of Matterport.
Matterport delivered the weakest full year guidance update of the whole group. The company added 56,000 customers to a total of 827,000. The stock is down 23.8% since the results and currently trades at $2.4.Is now the time to buy Matterport? Read our full report on Matterport here.
Best Q2: Procore Technologies (NYSE:PCOR)
Used to manage the multi-year expansion of the Panama Canal that began in 2007, Procore Technologies (NYSE:PCOR) offers a software-as-service project, finance and quality management platform for the construction industry.
Procore Technologies reported revenues of $228.5 million, up 32.7% year on year, beating analyst expectations by 4.84%. It was a "beat and raise" quarter for the company. Revenue and EPS exceeded expectations during the quarter. The company lifted full-year revenue guidance, which also exceeded Wall Street's expectations.
Procore Technologies achieved the strongest analyst estimates beat and highest full year guidance raise among its peers. The company added 615 customers to a total of 15,704. The stock is down 12.8% since the results and currently trades at $63.09.
Is now the time to buy Procore Technologies? Access our full analysis of the earnings results here, it's free.
Used to help design the Mars Rover, Ansys (NASDAQ:ANSS) offers a software-as-a-service platform that enables simulation for engineering and design.
ANSYS reported revenues of $496.6 million, up 4.8% year on year, beating analyst expectations by 1.33%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its gross margin.
ANSYS had the slowest revenue growth in the group. The stock is down 4.02% since the results and currently trades at $312.19.
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 $533.5 million, up 79.6% year on year, beating analyst expectations by 3.12%. It was a decent quarter for the company, with revenue and adjusted EBITDA exceeding expectations. While next quarter's revenue guidance was below Wall Street Consensus and full year revenue guidance was slightly above, adjusted EBITDA guidance for both periods was well ahead.
Unity pulled off the fastest revenue growth among the peers. The stock is down 11.7% since the results and currently trades at $36.61.
With the name chosen to reflect the idea of a repeating pattern or rhythm in electronic design, Cadence Design Systems (NASDAQ:CDNS) offers a software-as-a-service platform for semiconductor engineering and design.
Cadence reported revenues of $976.6 million, up 13.9% year on year, missing analyst expectations by 0.08%. It was a weaker quarter for the company, with underwhelming revenue guidance for the next quarter.
Cadence had the weakest performance against analyst estimates among the peers. The stock is down 0.04% since the results and currently trades at $241.
The author has no position in any of the stocks mentioned