As the craze of earnings season draws to a close, here's a look back at some of the most exciting (and some less so) results from Q4. Today we are looking at the vertical software stocks, starting with nCino (NASDAQ:NCNO).
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 Q4; on average, revenues beat analyst consensus estimates by 2.94%, while on average next quarter revenue guidance was 3.73% under consensus. Tech multiples have reverted to the historical mean after reaching all time levels in early 2021 and while some of the vertical software stocks have fared somewhat better that others, they have not been spared, with share prices declining 5.88% since the previous earnings results, on average.
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 $109.2 million, up 45.7% year on year, beating analyst expectations by 4.5%. It was a mixed quarter for the company, with exceptional revenue growth but underwhelming guidance for the next year.
“We are pleased with our strong fourth quarter financial results, as we once again exceeded top and bottom-line guidance,” said Pierre Naudé, Chairman and Chief Executive Officer of nCino.
The stock is up 5.27% since the results and currently trades at $23.57.
Is now the time to buy nCino? Access our full analysis of the earnings results here, it's free.
Best Q4: ANSYS (NASDAQ:ANSS)
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 $694.1 million, up 5.86% year on year, beating analyst expectations by 6.87%. It was a very strong quarter for the company, with very optimistic guidance for the next quarter and full year.
ANSYS delivered the highest full year guidance raise among its peers. The stock is up 20.5% since the results and currently trades at $321.99.
Is now the time to buy ANSYS? Access our full analysis of the earnings results here, it's free.
Slowest Q4: 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 $146.5 million, up 11.1% year on year, missing analyst expectations by 1.87%. It was a weak quarter for the company, with revenue guidance for the next quarter and full year below analysts' expectations.
Q2 Holdings had the weakest performance against analyst estimates in the group. The stock is down 26.8% since the results and currently trades at $23.22.
Read our full analysis of Q2 Holdings'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 $236 million, down 3.11% year on year, in line with analyst expectations. It was a slower quarter for the company, with declining revenue and gross margin.
The stock is down 45.2% since the results and currently trades at $5.4.
Read our full, actionable report on 2U here, it's free.
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 $451 million, up 42.8% year on year, beating analyst expectations by 2.95%. It was a mixed quarter for the company, with accelerating growth in large customers but a full year guidance missing analysts' expectations.
Unity had the weakest full year guidance update among the peers. The company added 265 enterprise customers paying more than $100,000 annually to a total of 1,340. The stock is down 20.3% since the results and currently trades at $30.15.
Read our full, actionable report on Unity here, it's free.
The author has no position in any of the stocks mentioned