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Q1 Rundown: Q2 Holdings (NYSE:QTWO) Vs Other Vertical Software Stocks


Adam Hejl /
2024/06/19 6:18 am EDT

As the craze of earnings season draws to a close, here's a look back at some of the most exciting (and some less so) results from Q1. Today, we are looking at vertical software stocks, starting with Q2 Holdings (NYSE:QTWO).

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 16 vertical software stocks we track reported a slower Q1; on average, revenues beat analyst consensus estimates by 0.9%. while next quarter's revenue guidance was 2.3% below consensus. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and while some of the vertical software stocks have fared somewhat better than others, they collectively declined, with share prices falling 0.1% on average since the previous earnings results.

Q2 Holdings (NYSE:QTWO)

Founded in 2004 by Hank Seale, Q2 (NYSE:QTWO) offers software-as-a-service that enables small banks to provide online banking and consumer lending services to their clients.

Q2 Holdings reported revenues of $165.5 million, up 8.2% year on year, topping analysts' expectations by 1.3%. It was a very strong quarter for the company, with an impressive beat of analysts' billings estimates.

“We had a strong start to the year with highlights across the business,” said Q2 CEO Matt Flake.

Q2 Holdings Total Revenue

The stock is up 11.8% since the results and currently trades at $57.87.

Is now the time to buy Q2 Holdings? 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 $1.08 billion, up 31.3% year on year, outperforming analysts' expectations by 3.3%. It was a very strong quarter for the company, with a significant improvement in its gross margin and a solid beat of analysts' billings estimates.

Toast Total Revenue

Toast pulled off the fastest revenue growth among its peers. The stock is up 1.7% since the results and currently trades at $24.15.

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

Weakest Q1: ANSYS (NASDAQ:ANSS)

Used to help design the Mars Rover, Ansys (NASDAQ:ANSS) offers a software-as-a-service platform that enables simulation for engineering and design.

ANSYS reported revenues of $466.6 million, down 8.4% year on year, falling short of analysts' expectations by 15.9%. It was a weak quarter for the company, with a decline in its gross margin and a miss of analysts' average contract value estimates.

ANSYS had the weakest performance against analyst estimates in the group. The stock is up 1.2% since the results and currently trades at $325.13.

Read our full analysis of ANSYS's results here.

PTC (NASDAQ:PTC)

Used to design the Airbus A380 and Boeing 787 Dreamliner commercial airplanes, PTC’s (NASDAQ:PTC) software-as-service platform helps engineers and designers create and test products before manufacturing.

PTC reported revenues of $603.1 million, up 11.2% year on year, surpassing analysts' expectations by 4.6%. It was a slower quarter for the company, with full-year revenue guidance missing analysts' expectations.

The stock is down 1% since the results and currently trades at $173.03.

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

nCino (NASDAQ:NCNO)

Founded in 2011 in North Carolina, nCino (NASDAQ:NCNO) makes cloud-based operating systems for banks and provides that software-as-a-service.

nCino reported revenues of $128.1 million, up 12.7% year on year, surpassing analysts' expectations by 1.1%. It was a weak quarter for the company, with a miss of analysts' billings estimates.

The stock is up 1.2% since the results and currently trades at $30.51.

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

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