Q3 Earnings Roundup: Guidewire (NYSE:GWRE) And The Rest Of The Vertical Software Segment

Anthony Lee /
2024/01/18 3:25 am EST

Let's dig into the relative performance of Guidewire (NYSE:GWRE) and its peers as we unravel the now-completed Q3 vertical software earnings season.

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, some have very specific needs. As a result, vertical software, which addresses industry-specific workflows, is growing and fueled by the pressures to improve productivity, whether it be for a life sciences, education, or banking company.

The 4 vertical software stocks we track reported a mixed Q3; on average, revenues beat analyst consensus estimates by 2.5% while next quarter's revenue guidance was 4.5% below consensus. Stocks have been under pressure as inflation (despite slowing) makes their long-dated profits less valuable, but vertical software stocks held their ground better than others, with the share prices up 10.5% on average since the previous earnings results.

Weakest Q3: Guidewire (NYSE:GWRE)

Founded by two individuals involved in the development of leading procurement software Ariba, Guidewire (NYSE:GWRE) offers insurance companies a software-as-a-service platform to help sell their products and manage their workflows.

Guidewire reported revenues of $207.4 million, up 6.2% year on year, topping analyst expectations by 2.9%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its gross margin.

“We are thrilled with our first quarter financial results and the continued momentum in Guidewire Cloud Platform with another seven cloud deals closed,” said Mike Rosenbaum, chief executive officer, Guidewire.

Guidewire Total Revenue

Guidewire delivered the weakest full-year guidance update of the whole group. The stock is up 12.8% since the results and currently trades at $111.42.

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

Best Q3: Manhattan Associates (NASDAQ:MANH)

Boasting major consumer staples and pharmaceutical companies as clients, Manhattan Associates (NASDAQ:MANH) offers a software-as-service platform that helps customers manage their supply chains.

Manhattan Associates reported revenues of $238.4 million, up 20.4% year on year, outperforming analyst expectations by 5.4%. It was a very strong quarter for the company, with a solid beat of analysts' revenue estimates. Its full-year revenue and adjusted EPS guidance were both raised and came in higher than Wall Street's estimates. 

Manhattan Associates Total Revenue

Manhattan Associates scored the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The stock is up 14% since the results and currently trades at $216.24.

Is now the time to buy Manhattan Associates? Access our full analysis of the earnings results here, it's free.

Alarm.com (NASDAQ:ALRM)

Founded in 2000 as a business unit within MicroStrategy, Alarm.com (NASDAQ:ALRM) is a software-as-a-service platform that enables users to control their security systems and smart home appliances from a single app.

Alarm.com reported revenues of $221.9 million, up 2.6% year on year, falling short of analyst expectations by 0.7%. It was a decent quarter for the company, with gross margin, adjusted EBITDA, and EPS exceeding analysts' estimates. Its stronger profitability was driven by better-than-expected results in its SaaS and license segment, which is its highest-margin revenue stream. 

Alarm.com had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is up 21.4% since the results and currently trades at $62.41.

Read our full analysis of Alarm.com's results here.

Bentley (NASDAQ:BSY)

Founded by brothers Keith and Barry Bentley, Bentley Systems (NASDAQ:BSY) offers a software-as-a-service platform that addresses the lifecycle of infrastructure projects such as road networks, tunnel systems, and wastewater facilities.

Bentley reported revenues of $306.6 million, up 14.3% year on year, surpassing analyst expectations by 2.3%. It was a solid quarter for the company, with a decent beat of analysts' revenue estimates and an improvement in its gross margin.

The stock is up 2.1% since the results and currently trades at $49.

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

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The author has no position in any of the stocks mentioned