As vertical software stocks’ Q4 earnings season wraps, let's dig into this quarter's best and worst performers, including Q2 Holdings (NYSE:QTWO) 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 17 vertical software stocks we track reported a mixed Q4; on average, revenues beat analyst consensus estimates by 2.94%, while on average next quarter revenue guidance was 3.73% under consensus. Tech multiples have reverted to the historical mean after reaching all time levels in early 2021 and while some of the vertical software stocks have fared somewhat better than others, they have not been spared, with share prices declining 5.32% since the previous earnings results, on average.
Slowest Q4: Q2 Holdings (NYSE:QTWO)
Founded in 2004 by Hank Seale, Q2 (NYSE:QTWO) offers software as a service that enables small banks provide online banking and consumer lending services to their clients.
Q2 Holdings reported revenues of $146.5 million, up 11.1% year on year, missing analyst expectations by 1.87%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and full year.
“We closed out the year with strong execution across the business and believe we have positioned ourselves well to accelerate subscription revenue growth and improve profitability,” said Q2 CEO Matt Flake.
Q2 Holdings delivered the weakest performance against analyst estimates of the whole group. The stock is down 25.2% since the results and currently trades at $23.74.
Read our full report on Q2 Holdings here, it's free.
Best Q4: 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 $694.1 million, up 5.86% year on year, beating analyst expectations by 6.87%. It was a very good quarter for the company, with very optimistic guidance for the next quarter and the full year.
ANSYS scored the highest full year guidance raise among its peers. The stock is up 20.1% since the results and currently trades at $320.77.
Is now the time to buy ANSYS? Access our full analysis of the earnings results here, it's free.
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 $563.4 million, up 16% year on year, beating analyst expectations by 1.97%. It was a weak quarter for the company, with revenue guidance for the next quarter and the full year missing analysts' expectations.
The stock is up 7.69% since the results and currently trades at $179.03.
Read our full analysis of Veeva Systems's results here.
Agilysys (NASDAQ:AGYS)
Originally a subsidiary of Pioneer-Standard Electronics that distributed electronic components, Agilysys (NASDAQ:AGYS) offers a software-as-service platform that helps hotels, resorts, restaurants, and other hospitality businesses manage their operations and workflows.
Agilysys reported revenues of $49.9 million, up 26.5% year on year, beating analyst expectations by 3.73%. It was a solid quarter for the company, with a decent beat of analyst estimates.
The stock is up 4.49% since the results and currently trades at $85.57.
Read our full, actionable report on Agilysys here, it's free.
Olo (NYSE:OLO)
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 $49.8 million, up 24.6% year on year, beating analyst expectations by 2.39%. It was a mixed quarter for the company, with a decent beat of analysts' expectations but underwhelming guidance for the next year.
The stock is up 4.19% since the results and currently trades at $8.45.
Read our full, actionable report on Olo here, it's free.
The author has no position in any of the stocks mentioned