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 Salesforce (NYSE:CRM) and the rest of the sales software stocks fared in Q3.
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 5 sales software stocks we track reported a slower Q3; on average, revenues beat analyst consensus estimates by 1.61%, while on average next quarter revenue guidance was 0.86% under consensus. Investors abandoned cash burning companies since high interest rates will make it harder to raise capital and while some of the sales software stocks have fared somewhat better that others, they have not been spared, with share prices declining 5.78% 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 $7.83 billion, up 14.1% year on year, in line with analyst expectations. It was a weaker quarter for the company, with underwhelming revenue guidance for the next quarter and slow revenue growth.
Salesforce delivered the slowest revenue growth and weakest full year guidance update of the whole group. The stock is down 7.8% since the results and currently trades at $147.29.
Best Q3: 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 $287.6 million, up 45.5% year on year, beating analyst expectations by 3.24%. It was a mixed quarter for the company, with exceptional revenue growth but decelerating growth in large customers.
ZoomInfo pulled off the fastest revenue growth among its peers. The company added 85 enterprise customers paying more than $100,000 annually to a total of 1,848. The stock is down 41.4% since the results and currently trades at $25.46.
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Weakest Q3: Zendesk (NYSE:ZEN)
Founded in 2006 by three Danish friends who got tired of implementing complex old-school solutions, Zendesk (NYSE:ZEN) is a software as a service platform that makes it easier for companies to provide help and support to their customers.
Zendesk reported revenues of $416.8 million, up 20.1% year on year, missing analyst expectations by 2%. It was a weaker quarter for the company, with a miss of the top line analyst estimates.
Zendesk had the weakest performance against analyst estimates in the group. The stock currently trades at $77.48 as the company will be acquired by a consortium led by Hellman & Friedman and Permira for $77.50 per share in cash
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 $128.7 million, up 33.2% year on year, beating analyst expectations by 2.61%. It was a slower quarter for the company, with underwhelming revenue guidance for the next quarter.
The company added 501 enterprise customers paying more than $5,000 annually to a total of 16,713. The stock is up 8.65% since the results and currently trades at $14.31.
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 $443.9 million, up 30.8% year on year, beating analyst expectations by 4.19%. It was a mixed quarter for the company, with a decent beat of analyst estimates but underwhelming revenue guidance for the next quarter.
HubSpot pulled off the strongest analyst estimates beat and highest full year guidance raise among the peers. The company added 8,040 customers to a total of 158,905. The stock is up 9.75% since the results and currently trades at $289.00.
The author has no position in any of the stocks mentioned