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A Look Back at Vertical Software Stocks' Q4 Earnings: Upstart (NASDAQ:UPST) Vs The Rest Of The Pack


Anthony Lee /
2023/03/30 3:58 am EDT

As vertical software stocks’ Q4 earnings season wraps, let's dig into this quarter's best and worst performers, including Upstart (NASDAQ:UPST) 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 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. Increasing interest rates hurt growth companies as investors search for near-term cash flows and while some of the vertical software stocks have fared somewhat better that others, they have not been spared, with share prices declining 7.56% since the previous earnings results, on average.

Upstart (NASDAQ:UPST)

Founded by the former head of Google's enterprise business Dave Girouard, Upstart (NASDAQ:UPST) is an AI-powered lending platform that helps banks better evaluate the risk of lending money to a person and provide loans to more customers.

Upstart reported revenues of $146.9 million, down 51.9% year on year, beating analyst expectations by 10.7%. It was a weak quarter for the company, with declining revenue and underwhelming sales guidance for the next quarter.

“Despite the economic headwinds of 2022 and continued funding challenges that have impacted our financial results, we’re a much better company than we were a year ago,” said Dave Girouard, co-founder and CEO of Upstart.

Upstart Total Revenue

Upstart pulled off the strongest analyst estimates beat but had the slowest revenue growth of the whole group. The stock is down 18.5% since the results and currently trades at $13.7.

Read our full report on Upstart 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 very solid guidance for the next year.

ANSYS Total Revenue

ANSYS scored the highest full year guidance raise among its peers. The stock is up 19.8% since the results and currently trades at $320.07.

Is now the time to buy ANSYS? Access our full analysis of the earnings results 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 $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 the full year missing analysts' expectations.

Q2 Holdings had the weakest performance against analyst estimates in the group. The stock is down 27.6% since the results and currently trades at $22.97.

Read our full analysis of Q2 Holdings's results here.

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 $186.4 million, up 41.2% year on year, beating analyst expectations by 5.94%. It was a strong quarter for the company, with exceptional revenue growth.

The company added 683 customers to a total of 14,086. The stock is up 18.8% since the results and currently trades at $59.6.

Read our full, actionable report on Procore Technologies here, it's free.

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 $1.32 billion, up 8.78% year on year, in line with analyst expectations. It was a weak quarter for the company, with full year revenue guidance missing analysts' expectations.

The stock is down 9.64% since the results and currently trades at $199.84.

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

The author has no position in any of the stocks mentioned