Looking back on vertical software stocks' Q3 earnings, we examine the best and worst performers, including Toast (NYSE:TOST) 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 weaker Q3; on average, revenues were in line with analyst consensus estimates, while on average next quarter revenue guidance was 2.32% under consensus. Tech stocks have been hit the hardest as investors start to value profits over growth, but vertical software stocks held their ground better than others, with the share prices up 11.7% since the previous earnings results, on average.
Best Q3: 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 $752 million, up 54.6% year on year, beating analyst expectations by 4.31%. It was a very strong quarter for the company, with a significant improvement in gross margin and exceptional revenue growth.
"Toast delivered strong results in the third quarter, surpassing $100 billion in annualized GPV for the first time and driving sustained revenue momentum and continued margin improvement,” said Toast CEO, Chris Comparato.
Toast scored the fastest revenue growth of the whole group. The stock is up 13.7% since the results and currently trades at $22.73.
Is now the time to buy Toast? Access our full analysis of the earnings results here, it's free.
Founded in 2011 before any mass market VR headset was released, Matterport (NASDAQ:MTTR) provides the hardware and software necessary to turn real world spaces into 3D visualization.
Matterport reported revenues of $37.9 million, up 37.3% year on year, beating analyst expectations by 5.69%. It was a very strong quarter for the company, with exceptional revenue growth and a solid beat of analyst estimates.
Matterport pulled off the strongest analyst estimates beat among its peers. The company added 41,000 customers to a total of 657,000. The stock is up 2.14% since the results and currently trades at $3.09.
Is now the time to buy Matterport? Access our full analysis of the earnings results here, it's free.
Weakest Q3: 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 $157.2 million, down 31.2% year on year, missing analyst expectations by 7.2%. It was a weak quarter for the company, with declining revenue and underwhelming revenue guidance for the next quarter.
Upstart had the weakest performance against analyst estimates. The stock is down 3.46% since the results and currently trades at $18.39.
Read our full analysis of Upstart's results here.
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 $105.2 million, up 50.3% year on year, beating analyst expectations by 1.78%. It was a mixed quarter for the company, with exceptional revenue growth but underwhelming revenue guidance for the next quarter.
The stock is down 4.44% since the results and currently trades at $24.92.
Read our full, actionable report on nCino here, it's free.
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 $4.52 billion, up 10% year on year, inline with analyst expectations. It was a weaker quarter for the company, with full year guidance missing analysts' expectations and slow revenue growth.
The stock is up 9.7% since the results and currently trades at $360.62.
Read our full, actionable report on Adobe here, it's free.
The author has no position in any of the stocks mentioned