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Vertical Software Stocks Q3 Teardown: Toast (NYSE:TOST) Vs The Rest


Adam Hejl /
2022/01/25 6:03 am EST
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The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s have a look at how the vertical software stocks have fared in Q3, starting with Toast (NYSE:TOST).

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 13 vertical software stocks we track reported a solid Q3; on average, revenues beat analyst consensus estimates by 4.23%, while on average next quarter revenue guidance was 3.87% above consensus. Tech stocks have had a very rocky start in 2022 and vertical software stocks have not been spared, with share price down 37.5% since earnings, on average.

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 $486.3 million, up 105% year on year, beating analyst expectations by 12.1%. It was a very strong quarter for the company, with an impressive beat of analyst estimates and an exceptional revenue growth.

“In the third quarter, we delivered strong results across the board,” said Chris Comparato, CEO, Toast.

Toast Total Revenue

Toast scored the strongest analyst estimates beat of the whole group. The high-flying stock is down 62.9% since the results and currently trades at $22.54.

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

Best Q3: Doximity (NYSE:DOCS)

Founded in 2010 and named for a combination of “docs” and “proximity”, Doximity (NYSE: DOCS) is the leading professional network for U.S. medical professionals.

Doximity reported revenues of $79.3 million, up 75.8% year on year, beating analyst expectations by 7.9%. It was a stunning quarter for the company, with a very optimistic guidance for the next quarter and an exceptional revenue growth.

Doximity Total Revenue

Doximity delivered the highest full year guidance raise among its peers. The stock is down 43.8% since the results and currently trades at $43.

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

Weakest Q3: Adobe (NASDAQ:ADBE)

One of the most well-known Silicon Valley software companies around, Adobe (NASDAQ:ADBE) is a leading provider of software as service in the digital design and document management space.

Adobe reported revenues of $4.11 billion, up 20% year on year, in line with analyst expectations. It was a weak quarter for the company, with both the guidance for next quarter and for the full year missing analysts' expectations.

Adobe had the weakest full year guidance update in the group. The stock is down 20.6% since the results and currently trades at $499.91.

Read our full analysis of Adobe's results here.

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 $476.1 million, up 26.1% year on year, beating analyst expectations by 2.16%. It was a decent quarter for the company, with revenue guidance for the next quarter roughly in line with what analysts were expecting.

The stock is down 17.1% since the results and currently trades at $225.38.

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

Upstart (NASDAQ:UPST)

Founded by the former head of Google's enterprise business Dave Girouard, Upstart (NASDAQ:UPST) is an AI-powered lending platform that helps banks better evaluate the risk of lending money to a person and provide loans to more customers.

Upstart reported revenues of $228.4 million, up 249% year on year, beating analyst expectations by 6.31%. It was a strong quarter for the company, with a very optimistic guidance for the next quarter.

Upstart pulled off the fastest revenue growth among the peers. The stock is down eye-watering 71.3% since the results and currently trades at $89.81.

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

The author has no position in any of the stocks mentioned