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 Q2. Today we are looking at the vertical software stocks, starting with 2U (NASDAQ:TWOU).
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 12 vertical software stocks we track reported a weaker Q2; on average, revenues missed analyst consensus estimates by 0.53%, while on average next quarter revenue guidance was 3.23% under consensus. There has been a stampede out of high valuation technology stocks as raising interest rates encourages investors to value profits over growth again and vertical software stocks have not been spared, with share prices down 24.4% since the previous earnings results, on average.
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.
"We are taking significant action to accelerate 2U's transition to a platform company under the edX brand and unify our product and marketing strategy to create the world's leading free-to-degree online learning marketplace," said 2U Co-Founder and CEO Christopher "Chip" Paucek. "
2U delivered the weakest full year guidance update of the whole group. The stock is down 47.1% since the results and currently trades at $5.47.
Is now the time to buy 2U? 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 scored the strongest analyst estimates beat and fastest revenue growth among its peers. The stock is down 0.71% since the results and currently trades at $18.00.
Is now the time to buy Toast? Access our full analysis of the earnings results here, it's free.
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 revenue guidance for both the next quarter and the full year missing analysts' estimates. Unity previously announced that it has entered into an agreement to merge with ironSource.
The stock is down 38.4% since the results and currently trades at $30.85.
Founded by Noah Glass, who wanted to get a cup of coffee faster on his way to work, Olo (NYSE:OLO) provides restaurants and food retailers with software to manage food orders and delivery.
Olo reported revenues of $45.6 million, up 27% year on year, missing analyst expectations by 0.5%. It was a weak quarter for the company, with revenue guidance for both the next quarter and the full year missing analysts' expectations.
The stock is down 37.8% since the results and currently trades at $8.10.
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 $4.43 billion, up 12.6% 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 slow revenue growth.
The stock is down 22.7% since the results and currently trades at $287.10.
The author has no position in any of the stocks mentioned