The end of an earnings season can be a great time to assess how companies are handling the current business environment and discover new stocks. Let’s have a look at how nCino (NASDAQ:NCNO) and the rest of the vertical software stocks fared in Q1.
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 17 vertical software stocks we track reported a mixed Q1; on average, revenues beat analyst consensus estimates by 2.61%, while on average next quarter revenue guidance was 0.07% under consensus. Technology stocks have been hit hard on fears of higher interest rates as investors search for near-term cash flows, but vertical software stocks held their ground better than others, with the share prices up 15.3% since the previous earnings results, on average.
Weakest Q1: nCino (NASDAQ:NCNO)
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 $113.7 million, up 20.7% year on year, in line with analyst expectations. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter. The full-year revenue guidance was roughly in line. Similarly, earnings per share guidance for both the next quarter and the full year were in line with market expectations.
“We are pleased to begin the year reporting a strong quarter with record operating income and free cash flow,” said Pierre Naudé, Chairman and Chief Executive Officer of nCino.
The stock is up 5.68% since the results and currently trades at $29.01.
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 $819 million, up 53.1% year on year, beating analyst expectations by 7.22%. It was a very strong quarter for the company, with a solid beat of analyst estimates and very optimistic guidance for the next quarter.
Toast pulled off the highest full year guidance raise among its peers. The stock is up 15.8% since the results and currently trades at $22.55.
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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 $153 million, up 14.1% year on year, beating analyst expectations by 1.95%. It was a weak quarter for the company, with revenue guidance for the next quarter and full year missing analysts' expectations.
Q2 Holdings had the weakest full year guidance update in the group. The stock is up 30.7% since the results and currently trades at $30.07.
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 $4.82 billion, up 9.8% year on year, in line with analyst expectations. It was a mixed quarter for the company, with revenue, Digital Media ARR (annual recurring revenue), and earnings surpassing expectations but underwhelming revenue guidance for the next quarter.
The stock is down 2.2% since the results and currently trades at $480.
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 $213.5 million, up 33.9% year on year, beating analyst expectations by 5.07%. It was a strong quarter for the company, with accelerating customer growth.
The company added 601 customers to a total of 15,089. The stock is up 19.4% since the results and currently trades at $63.49.
The author has no position in any of the stocks mentioned