As we reflect back on the just completed Q1 automation software sector earnings season, we dig into the relative performance of ServiceNow (NYSE:NOW) and its peers.
The whole purpose of software is to automate tasks to increase productivity. Today, innovative new software techniques, often involving AI and machine learning, are finally allowing automation that has graduated from simple one- or two-step workflows to more complex processes integral to enterprises. The result is surging demand for modern automation software.
The 6 automation software stocks we track reported a weaker Q1; on average, revenues beat analyst consensus estimates by 1.16%, while on average next quarter revenue guidance was 0.21% under consensus. There has been a stampede out of high valuation technology stocks as raising interest rates encourage investors to value profits over growth again, but automation software stocks held their ground better than others, with the share prices up 21.2% since the previous earnings results, on average.
Founded by Fred Luddy who wrote the code for the initial prototype on a single flight from San Francisco to London, ServiceNow (NYSE:NOW) offers software as a service platform that helps companies become more efficient by allowing them to automate workflows across IT, HR and Customer Service.
ServiceNow reported revenues of $2.1 billion, up 21.7% year on year, in line with analyst expectations. It was a mixed quarter for the company, with subscription revenue coming in ahead of estimates. Adjusted operating profit also beat by 9% in the quarter. However, there was a slowdown in new contract wins.
“Once again, ServiceNow delivered a powerful combination of growth and profitability,” said ServiceNow Chairman and CEO Bill McDermott.
The stock is up 24.9% since the results and currently trades at $567.
Is now the time to buy ServiceNow? Access our full analysis of the earnings results here, it's free.
Best Q1: Appian (NASDAQ:APPN)
Founded by Matt Calkins and his three friends out of an apartment in Northern Virginia, Appian (NASDAQ:APPN) sells a software platform that lets its users build applications without using much code, allowing them to create new software more quickly.
Appian reported revenues of $135.2 million, up 18.4% year on year, beating analyst expectations by 2.96%. It was a mixed quarter for the company, with a decent beat of analyst estimates but underwhelming revenue guidance for the next quarter.
The stock is up 47.1% since the results and currently trades at $52.5.
Is now the time to buy Appian? Access our full analysis of the earnings results here, it's free.
Slowest Q1: Pegasystems (NASDAQ:PEGA)
Founded by Alan Trefler in 1983, Pegasystems (NASDAQ:PEGA) offers a software-as-a-service platform to automate and optimize workflows in customer service and engagement.
Pegasystems reported revenues of $325.5 million, down 13.5% year on year, missing analyst expectations by 7.14%. It was a weak quarter for the company, with a miss of the top line analyst estimates and a decline in gross margin.
Pegasystems had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is up 12.2% since the results and currently trades at $49.
Founded as a reaction to the catastrophic events of 9/11, Everbridge (NASDAQ:EVBG) supplies software that helps governments and businesses keep people and infrastructure safe in emergencies.
Everbridge reported revenues of $108.3 million, up 7.86% year on year, beating analyst expectations by 1.7%. It was a slower quarter for the company, with decelerating customer growth. A significant development this quarter was a deceleration in customer growth, representing a rare quarter of sequential customer loss.
The company lost 13 customers and ended up with a total of 6,500. The stock is up 14.9% since the results and currently trades at $28.
Started in 2005 in Romania as a tech outsourcing company, UiPath (NYSE:PATH) makes software that helps companies automate repetitive computer tasks.
UiPath reported revenues of $289.6 million, up 18.2% year on year, beating analyst expectations by 6.76%. It was a mixed quarter for the company, with underwhelming revenue guidance for the next quarter. Full-year revenue guidance was ahead, and free cash flow stayed positive, marking the second straight quarter of cash inflows.
UiPath achieved the strongest analyst estimates beat and highest full year guidance raise among the peers. The stock is up 10.8% since the results and currently trades at $18.11.
The author has no position in any of the stocks mentioned