The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s have a look at how the sales software stocks have fared in Q2, starting with Salesforce (NYSE:CRM).
Companies need to be able to interact with and sell to their customers as efficiently as possible. This reality, coupled with the ongoing migration of enterprises to the cloud drives demand for cloud-based customer relationship management (CRM) software that integrate data analytics with sales and marketing functions.
The 4 sales software stocks we track reported a mixed Q2; on average, revenues beat analyst consensus estimates by 1.83%, while on average next quarter revenue guidance was 0.71% under consensus. Investors abandoned cash burning companies since high interest rates will make it harder to raise capital, but sales software stocks held their ground better than others, with share prices down 2.25% since the previous earnings results, on average.
Launched in 1999 from a rented one-bedroom apartment in San Francisco by Marc Benioff and his three co-founders, Salesforce (NYSE:CRM) is a software as a service platform that helps companies access, manage and share sales information.
Salesforce reported revenues of $8.6 billion, up 11.4% year on year, in line with analyst expectations. It was a decent quarter for the company, with an improvement in its gross margin. In addition, revenue, non-GAAP operating profit, and adjusted EPS all exceeded expectations this quarter.
“Our transformation drove our strong second quarter results, delivering revenue of $8.6 billion and record GAAP and non-GAAP operating margins,” said Marc Benioff, Chair and CEO of Salesforce.
Salesforce delivered the slowest revenue growth of the whole group. The stock is up 2.85% since the results and currently trades at $221.42.Is now the time to buy Salesforce? Read our full report on Salesforce here.
Best Q2: HubSpot (NYSE:HUBS)
Started in 2006 by two MIT grad students, HubSpot (NYSE:HUBS) is a software as a service platform that helps small and medium-size businesses sell, market themselves, and get found on the internet.
HubSpot reported revenues of $529.1 million, up 25.5% year on year, beating analyst expectations by 4.68%. It was a strong quarter for the company, with a decent beat of analysts' revenue estimates. It was also good to see that its full-year revenue and non-GAAP operating profit guidance (both of which were raised from previous) came in higher than Wall Street's expectations.
HubSpot achieved the strongest analyst estimates beat, fastest revenue growth, and highest full year guidance raise among its peers. The company added 7,626 customers to a total of 184,924. The stock is down 4.25% since the results and currently trades at $530.13.
Is now the time to buy HubSpot? Access our full analysis of the earnings results here, it's free.
Weakest Q2: ZoomInfo (NASDAQ:ZI)
Founded in 2007 as DiscoveryOrg and renamed after a merger in 2019, ZoomInfo (NASDAQ:ZI) is a software as a service product that provides sales departments with access to a database of prospective clients.
ZoomInfo reported revenues of $308.6 million, up 15.5% year on year, missing analyst expectations by 0.8%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter. In addition, the full-year revenue guidance was lowered for revenue, non-GAAP operating profit, and unlevered free cash flow.
ZoomInfo had the weakest performance against analyst estimates and weakest full year guidance update in the group. The company lost 12 enterprise customers paying more than $100,000 annually and ended up with a total of 1,893. The stock is down 30.4% since the results and currently trades at $17.8.
Founded in Chennai, India in 2010 with the idea of creating a “fresh” helpdesk product, Freshworks (NASDAQ: FRSH) offers a broad range of software targeted at small and medium sized businesses.
Freshworks reported revenues of $145.1 million, up 19.5% year on year, beating analyst expectations by 2.57%. It was a good quarter for the company, with a decent beat of analysts' revenue estimates. In addition, revenue guidance for the next quarter came in roughly in line with analysts' expectations.
The company added 664 enterprise customers paying more than $5,000 annually to a total of 19,105. The stock is up 22.8% since the results and currently trades at $22.38.
The author has no position in any of the stocks mentioned