As Q1 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers amongst the vertical software stocks, including Olo (NYSE:OLO) 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 11 vertical software stocks we track reported a mixed Q1; on average, revenues beat analyst consensus estimates by 2.53%, while on average next quarter revenue guidance was 2.08% under consensus. The whole tech sector has been facing a sell-off since late last year, but vertical software stocks held their ground better than others, with share price down 7.06% since earnings, on average.
Founded by Noah Glass, who wanted to get a cup of coffee faster on his way to work, Olo (NYSE:OLO) provides restaurants and food retailers with software to manage food orders and delivery.
Olo reported revenues of $42.7 million, up 18.3% year on year, beating analyst expectations by 2.63%. It was a weaker quarter for the company, with a deceleration in net revenue retention rate and a decline in gross margin.
“In the first quarter, Olo’s revenue and profitability momentum continued, as we took meaningful strides towards enabling digital hospitality. Our platform supported year-over-year growth in transaction volume, and we expanded our product portfolio and use cases, added new and expanded existing relationships, and grew our technology partner ecosystem,” said Noah Glass, Olo’s Founder and CEO.
The stock is up 13% since the results and currently trades at $10.08.
Is now the time to buy Olo? Access our full analysis of the earnings results here, it's free.
Best Q1: Toast (NYSE:TOST)
Founded by three MIT engineers at a local Cambridge bar, Toast (NYSE:TOST) provides integrated point of sale (POS) hardware, software, and payments solutions for restaurants.
Toast reported revenues of $535 million, up 52% year on year, beating analyst expectations by 9.07%. It was an incredible quarter for the company, with a significant improvement in gross margin and a very optimistic guidance for the next quarter.
Toast delivered the strongest analyst estimates beat and highest full year guidance raise among its peers. The stock is down 7.71% since the results and currently trades at $13.16.
Is now the time to buy Toast? Access our full analysis of the earnings results here, it's free.
Weakest Q1: Unity (NYSE:U)
Started as a game studio by three friends in a Copenhagen apartment, Unity (NYSE:U) is a software as a service platform that makes it easier to develop and monetize new games and other visual digital experiences.
Unity reported revenues of $320.1 million, up 36.3% year on year, missing analyst expectations by 0.31%. It was a weak quarter for the company, with revenue guidance for both the next quarter and the full year below analysts' estimates.
Unity had the weakest performance against analyst estimates in the group. The company added 31 enterprise customers paying more than $100,000 annually to a total of 1,083. The stock is down 20.5% since the results and currently trades at $38.19.
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 $1.17 billion, up 18.2% year on year, beating analyst expectations by 2.06%. It was a mixed quarter for the company, with a decent beat of analyst estimates but a full year guidance missing analysts' expectations.
The stock is down 8.97% since the results and currently trades at $174.44.
Veeva Systems (NYSE:VEEV)
Built on top of Salesforce as one of the first vertical-focused cloud platforms, Veeva (NYSE:VEEV) provides data and customer relationship management (CRM) software for organizations in the life sciences industry.
Veeva Systems reported revenues of $505.1 million, up 16.4% year on year, beating analyst expectations by 1.85%. It was a mixed quarter for the company, with a decent beat of analyst estimates but a slow revenue growth.
The stock is up 13.2% since the results and currently trades at $190.
The author has no position in any of the stocks mentioned